As people near retirement age, it's common for folks to contemplate updating wills, trusts and other estate planning documents. However, they often overlook the potential dangers of not planning for the costs of long-term nursing home care. According to certain statistics, nursing home costs in Missouri (for a semi-private room) average approximately $58,000 per year (per person). The national average is even higher.
Unfortunately, Medicare will generally only pay for the first 100 days of a nursing home stay. After that, there's generally only one option left: spending down all of your assets to pay for medical care until you can become eligible for Medicaid.
Without the proper planning, you potentially run the risk of losing everything you own. The assets you’ve spent a lifetime building could be completely spent down in a very short time. Grandparents who have worked their entire lives to leave something to their children and grandchildren may be left with nothing. And the sad fact is, this is often preventable.
The key is simply planning in advance. And this type of planning is critical for anyone in (or approaching) retirement who may ultimately need to (or want to) rely on Medicaid. Once the proper planning is in place, it may be possible to save your:
One of the most common tools that can be used to protect your assets is a Medicaid Asset Protection Trust. By using this type of trust, the assets transferred into it are protected from being counted as resources for Medicaid qualification purposes. This type of trust is “irrevocable,” meaning that you, as the person making the trust, have given up the power to revoke the trust and cannot end its existence. Although the provisions of the trust cannot be changed, your trustee (the person chosen to manage the trust) has the power to change investments, buy and sell assets, and, generally, manage your assets as you would have done.
Although the trust is irrevocable, you do, however, have a “limited power of appointment” to change the remainder beneficiaries of the trust estate through your will, living trust, or other written instrument. The power of appointment is “limited” in that you can only appoint the assets to your descendants, and not to yourself, your estate, your creditors, or the creditors of your estate. Further, this power is a “testamentary” power, meaning that the instructions you leave will only be effective upon your death.
If you, or a loved one, would benefit from discussing Medicaid planning further, we encourage you to schedule an appoint to speak with one of our attorneys. We would be happy to visit with you about what planning strategies might work best to fit your situation.
*This article is intended for information only and is not intended to be construed as legal advice. The choice of a lawyer is an important decision and should not be based solely upon advertisements.