Most people do not have estate plans, but many of those that do have been quite diligent. They have a will or a trust that will facilitate asset transfers after they are gone, and they have a living will and durable powers of attorney to account for possible incapacity.
If you have taken these steps, you may feel as though you have fulfilled your responsibility to your family, and you have protected your own interests. However, even if you cover these bases, you have to consider legacy preservation, and many otherwise responsible people fail to do so.
Long-Term Care Costs
No one wants to rely on others, even when you are getting up there in years. You may not be able to run five miles a day anymore, and you may have other limitations. However, can be hard to imagine a time when you will need help with your activities of daily living.
This is fully understandable because you can’t wrap your head around something that you have never experienced. At the same time, there are statistics out there that paint a compelling picture that everyone should take seriously.
The United States Department of Health and Human Services has stated that seven out of ten seniors will need living assistance, and most of them will require paid care. More than one third of elders will reside in nursing homes at some point in time.
These stats make sense when you understand the fact that the life expectancy for someone that is 67 is at least 85 years depending on your gender.
Medicare does not cover a stay in a nursing home, and it doesn’t pay for in-home care either, so this is not the solution. In the Manhattan, NY area where we practice, the median annual cost for a semi-private room last year was $149,650, and it was $158,775 for a private room.
Depending on your resources, long-term care costs could consume a significant portion of your legacy, and you have to brace yourself for two sets of bills if you are married.
Medicaid will cover long-term care, and this is perplexing to many people that paid taxes all of their lives to qualify for Medicare, but it is the reality. Of course, you cannot qualify for Medicaid unless you have very limited resources.
The asset ceiling is $16,800 in New York, but personal belongings and one motor vehicle are not counted. Plus, your home is not a countable asset with a $955,000 equity limit this year.
What Can You Do?
Anyone that thinks about this situation would consider lifetime gift giving to qualify for Medicaid. If you find out that you need to enter a long-term care facility, you can give your children their inheritances in advance because you will not be exiting the nursing home.
This would make the situation rather simple and straightforward, but it is complicated by the five-year look back period. If you give large gifts today in an effort to qualify for Medicaid, you would be ineligible for the next five years.
So, the key is to divest yourself of assets long before you actually need paid living assistance. A lot of people cannot do this because they rely on income that is generated by the lion’s share of their resources.
Fortunately, there is a solution in the form of an income only Medicaid trust. You convey the assets into the trust, and you can accept distributions of the earnings before you apply for Medicaid.
With regard to the funding, in addition to the income-producing assets, you may want to convey your home into the trust. Even though it is not a countable asset, a lien could be placed on the property after your death if you are a Medicaid beneficiary and it is in your direct possession.
If you fund the trust at least 60 months before you seek Medicaid eligibility because you have to enter a nursing home, the assets would not count, and you would be approved.
There is also a Community Medicaid option for people that can get the care they need in their own homes. Contact us to get all the details, because there is a specific window of opportunity that is closing soon.
Take Action Today!
We are here to help if you would like to work with a Manhattan, NY elder law attorney to implement a nursing home asset protection plan. You can send us a message to request a consultation appointment, and we can be reached by phone at 212-973-0100.