Elder Law FAQ

A trust can help you protect your assets if you have to go into a nursing home.  A trust is a separate legal entity so when you transfer assets into a trust, you no longer own the assets.  In order to provide asset protection, the trust must be irrevocable.  If the trust is revocable, you can move the asset in and out whenever you choose.  Because you can get the assets whenever you want, there is no protection from creditors including the nursing home.  However, if the trust is irrevocable, the assets owned by the trust are protected from creditors including nursing home.  These trusts are generally referred to as Medicaid Asset Protection Trusts – click to watch this video to learn more.

If you are married and your spouse goes into a nursing home, you will not lose your home if you apply for Medicaid.  Your home is an exempt asset as long as your spouse is living there.  However, if your spouse later dies or if you are single when you go into a nursing home, Medicaid will put a lien on the home so your kids/grandkids may not inherit it.  There are ways to protect your home in case you have to go into a nursing home.  Watch this video to learn more.

When you apply for Medicaid to pay the nursing home, they will look back 60 months from the date you file the application to see what assets you had during that time.  You will have to show Medicaid what you did with those assets if you no longer have them.  If you disposed of any of those assets for less than fair market value or gave them away, Medicaid will penalize you.  The penalty period depends on the amount of assets you gave away.  The look back period and penalty period are not the same.  While the penalty period is different for everyone, the look back period is always 60 months.  Watch this video to learn more about the Medicaid’s 60 Month Look Back period. 

There are only 3 ways to pay for long term care:  you pay out of pocket, long term care insurance pays, or the government pays.  Most people pay using their life savings because they do not have long term care insurance and do not qualify for the government program that pays for nursing home case, Medicaid. Without planning, you have to spend your life savings before you can qualify for Medicaid.  Medicaid is the government program that pays for nursing home care, not Medicare.  However, qualifying for Medicaid can be difficult so it is important to plan ahead.   Watch this video to learn more about the 3 ways to pay for long term care.

Asset care is an alternative to traditional long- term care insurance. Using existing funds, it offers the advantages of an asset that grows and can be inherited by your beneficiaries if not used; has a long -term care benefit that can cover both spouses, has lifetime care options available; provides tax advantages and has no ongoing premiums unless you elect the lifetime coverage rider (and then the premium for the rider is contractually guaranteed and will not go up). This is better alternative for those who have retirement accounts or investment /savings accounts. A final feature worth mentioning is the ability to get your money back if you want or need it.

The Medicaid penalty period is the number of months you have to pay for your own care in the nursing home even if you are financially qualified and are otherwise eligible (already in the nursing home).  When applying for Medicaid there is a lookback period of 60 months to see if you have made any uncompensated transfers or gifts of assets.  If you have done so, Medicaid will penalize you for those transfers.  The penalty penalty is calculated by taking the amount given away in the last 60 months and dividing it by the Medicaid divisor ($6,400 in 2020).  So if you have given away $64,000 in the last 60 months, then you would have a 10 month penalty period.  There are strategies to provide for payment through this period while saving a substantial portion of your assets in an asset protection trust.  Watch this video to learn more about the Medicaid penalty period.

Unless you have an adequate amount of long term care insurance, you will have to pay for the nursing home using your savings, home and other property.  All of those assets are at risk.  If you want to protect your assets from the nursing home, you have to plan ahead.  To protect your assets, you have to do “Medicaid planning”.   Medicaid has a 60 month look back from the time you apply so you have to get assets transferred out of your name as soon as possible.    Transferring those assets to an asset protection trust is a great way to do so.  Watch this video to learn more.

Yes.  We have clients who were already in the nursing home private paying for care when their families hired us.  We can help you protect much more if you preplan.  However, even if you are already in the nursing home, in most cases we can still help you protect some of your life savings instead of losing it all to long term care expenses.  If you have a loved one in a nursing home and you are paying out of pocket, give us a call to see how much we can protect.