Michigan Residents: How to Avoid Nursing Home Taking Your House and Other AssetsOct 03, 2023
This article about protecting assets from nursing home expenses in Michigan by attorney Nicole Wipp at the Family & Aging Law Center is not legal advice; rather, it is for general informational purposes. To get legal advice specific to your situation, contact our office at (248)278-1511. We can help!
Nursing home care's emotional and financial burden can be overwhelming.
Protecting your assets from nursing home costs, including protecting your home, is achievable with proper planning and guidance. This blog post will provide valuable strategies and real-life examples, helping you navigate the complexities of asset protection and ensure financial security. Are you ready to safeguard your future?
Asset protection from nursing home costs is essential for financial security and requires careful planning.
Strategies such as Medicaid asset protection trusts, ladybird deeds, and other probate avoidance measures should be considered to develop a comprehensive plan.
Consulting with an elder law attorney can provide insight into real-life scenarios to help families protect their assets from nursing home costs effectively.
Understanding the Risk of Nursing Home Costs
A person looking at a nursing home costs chart
Nursing home care costs can be financially devastating, leading to the rapid depletion of your life savings and jeopardizing your financial security.With the national average cost of residential care in a nursing home at $7,908 per month for a semi-private room and $9,034 for a private room, it’s no wonder that safeguarding one’s assets from nursing home costs is paramount. This helps avert the depletion of your life savings and guarantees the preservation of your financial security while meeting Medicaid eligibility criteria.
Preserving assets for seniors may be more feasible than one might assume, with various measures available to safeguard assets and mitigate the effect of nursing home expenses. These measures can help cover nursing home costs while ensuring continued financial security for you and your loved ones. But what are these strategies, and how can they be implemented effectively?
What Are Nursing Home Care Costs In Michigan?
Nursing home care in Michigan is one of the most expensive in the United States. According to Genworth, the average cost of nursing home care in Michigan is over $9,700 monthly. With such hefty costs, it is easy to understand why many seniors worry about losing their assets, including their homes, to pay for nursing home care.
If long-term care is needed, this cost can quickly deplete your savings and assets.
It is essential to consider not only the cost of the nursing home itself but also additional expenses such as medications, medical supplies, and other services not covered by Medicare or Medicaid. Out-of-pocket payments for meals, transportation, and other services can further add to the financial burden of nursing home care. Planning can help ensure you have enough money to cover these costs while preserving your assets for future use.
Medicaid and Nursing Home Care
Medicaid, a government assistance program, provides financial assistance for nursing home care to those who meet the program’s eligibility criteria. However, a common misconception is that qualifying for Medicaid necessitates a “spend down,” meaning assets are depleted to present a financial inability to meet living expenses.
The good news is that it is possible to protect assets like your home and qualify for Medicaid without doing a full spend down.
Ideally, planning for Medicaid qualification without a full spend down is considered during estate planning.
However, even during a crisis (when there is no time to lose because someone is already in the nursing home), there are ways to protect assets, qualify for Medicaid, and receive the necessary nursing home care without resorting to a full "spend down." The type of planning for Medicaid qualification without a full spend down differs for each scenario, so consulting with an experienced attorney is crucial to successfully navigating this complex process.
This is what we do at the Family & Aging Law Center, so if you want to protect assets from nursing home care costs, contact us today! (248)278-1511
Can A Nursing Home Take Your House In Michigan?
A person looking at a long-term care insurance policy
Yes, a nursing home or the government can take the value of your house in Michigan if you do not have the correct estate planning documents or if you do not take the proper steps to protect your assets.
Medicaid, a program that helps pay for nursing home care for those who qualify, can take your house in probate in a process called "estate recovery," when benefits are used to cover your care costs. Once you pass away, the lien must be repaid before your heirs inherit the property.
Also, while you are alive, the home's value can be lost if the home needs to be sold, which happens frequently.
However, the good news is that you can take steps to protect the value of your home from being taken. How? Contact us today, we can help. (248)278-1511
Protecting Your House from Nursing Home Care Costs
When protecting your home from nursing home expenses while preserving Medicaid eligibility, there are a few things to do, a few things not to do, and a few things to consider.
Should You Buy Long-Term Care Insurance?
Long-term care insurance is a form of insurance policy that provides coverage for the expense of long-term care services, such as nursing home care. The advantages of obtaining long-term care insurance include less reliance on personal resources to finance nursing home care expenses and providing policyholders with more financial autonomy than Medicaid.
However, potential drawbacks must also be considered. For instance, long-term care insurance may have the following drawbacks:
It may not have any cash value if the policyholder is not in a nursing home, and all the money spent on the policy over the years will be lost.
Long-term care insurance rarely covers all costs.
There are usually delays in getting covered (90 days is standard, which in Michigan would mean losing an average of over $30,000 out of pocket before the policy even starts).
The upfront expense of long-term care insurance can be a major drain on finances.
Before deciding whether long-term care insurance is the right strategy for you, weighing its pros and cons is necessary.
Keep Your Home And Other Assets Out Of Probate
Probate is the legal process that distributes your assets upon your death. It can be a time-consuming and costly process. In Michigan, there are various ways to avoid probate, such as by setting up a trust or titling your home to pass it directly to your heirs outside of probate.
This is important because it will save your heirs the time and money associated with probate and ensure that your home is protected from claims by nursing homes and other creditors.
A ladybird deed or an Asset Protection Trust are two main ways we avoid estate recovery in Michigan.
An irrevocable trust is a legally binding arrangement that:
Transfers the ownership of assets to a trustee
Reduces the value of the estate
Provides protection from nursing home costs. By removing assets from your personal ownership, you can diminish the value of your estate, enabling you to meet Medicaid eligibility criteria.
However, one must know that Medicaid reviews financial transactions for up to five years. If your assets are transferred within this five-year “look-back” period, you may be subject to a penalty period during which you will be ineligible for Medicaid benefits.
A consultation with an elder law attorney can assist you in navigating the complexities of irrevocable trusts and ensuring compliance with Medicaid regulations.
Medicaid Asset Protection Trust - A Type Of Irrevocable Trust (But Not The Same)
A Medicaid Asset Protection Trust (MAPT) is a trust designed to safeguard a residence and other assets from being appropriated by Medicaid. Similar to an irrevocable trust, an asset protection trust provides a means to transfer assets to a trust that will be safeguarded from nursing home costs. The advantage of utilizing an asset protection trust is that it can protect assets from nursing home costs while still allowing the individual to qualify for Medicaid benefits.
Additionally, our asset protection trust allows the grantor to retain control of their assets while they are competent to do so, unlike a traditional irrevocable trust.
In Michigan, we may use a ladybird deed as part of a strategy to protect a home and its value. However, it is not always the correct thing to do. Many situations require a different strategy, so it is important to consult with an an attorney that is experienced in these matters.
Home Health Care as an Alternative
Home health care can be an alternative to nursing homes and may be a more suitable option for some individuals. However, in Michigan, it is rarely a more cost-effective option and can quickly lead to a rapid depletion of resources.
Additionally, it’s essential to recognize that home health care may require additional support from family members, including transportation, meal assistance, and emotional support.
Home health care is seldom appropriate for individuals with complex medical needs or requiring 24-hour care. It’s also important to consider the potential drawbacks of home health care, such as the current worker shortage, which may make it challenging to hire a qualified person for home care.
Ultimately, whether home health care is a suitable alternative to nursing home care will depend on the individual’s specific needs and circumstances.
Legal Considerations and Consultation
A person talking to an elder law attorney
Navigating the complexities of asset protection requires professional guidance and expertise. Trying to "do it yourself" often results in fatal mistakes because the rules are so complex that it is easy to violate them. Elder law is a specialty legal practice for a reason!
Consequences of Violating The Rules
If you make a mistake and violate the rules for Medicaid eligibility in nursing homes, or even worse, if you try to hide assets or lie to the nursing home or government about what assets there are, there are several unintended and devastating results that can and do occur:
The person needing the care can lose eligibility for benefits, in some cases, forever.
You could be forced to pay far more than you should have out of pocket because you lost time with mistakes you cannot recover.
You could lose some or all of the assets in Medicaid estate recovery.
You could face criminal or civil charges if you attempted to falsify information or documents.
A Good Elder Law Attorney Can Help
Consulting with a professional specialized in elder law and Medicaid planning is crucial to creating a plan tailored to your specific needs and understanding each approach's potential repercussions and restrictions. Elder law attorneys and estate planning professionals can provide valuable insights and recommendations on protecting your assets from nursing home costs while ensuring you comply with all relevant laws and regulations.
In addition to guiding the various strategies discussed in this blog post, elder law attorneys can also assist with more advanced planning tools, such as Medicaid qualified annuities and other legal methods for preserving assets. By working closely with these professionals, you can develop a comprehensive plan to safeguard your financial security, ensuring that you receive the care you need without sacrificing your hard-earned assets.
Elder Law Attorneys
A senior couple holding hands in front of their home, representing the importance of consulting with elder law attorneys on how to avoid nursing home taking your house.
Elder law attorneys are legal professionals who specialize in the unique needs of seniors, including asset protection, estate planning, and Medicaid qualification. They can help you navigate the complexities of Medicaid qualification without a full spend down, providing guidance on protecting assets like your home and qualifying for Medicaid benefits.
Elder law attorneys can also offer counsel on various asset protection strategies, such as establishing trusts and other legal methods to shield assets from nursing home costs.
When selecting an elder law attorney, it’s essential to choose a professional with a strong track record and expertise in the relevant areas of law. By working closely with an experienced elder law attorney, you can ensure that your asset protection plan is both effective and legally compliant, providing you with peace of mind and financial security.
Read about 10 benefits of comprehensive power of attorney here.
Estate planning determines who will receive your assets in the event of your death or incapacity.
In relation to nursing home care, estate planning is essential to ensure that your assets are safeguarded and distributed according to your preferences, including provisions for nursing home care. Strategies for estate planning may include:
Long-term care insurance
Medicaid asset protection trusts
To ensure legal compliance of your estate plan and effective asset protection, seeking counsel from an elder law attorney is imperative. By working with an experienced legal professional, you can develop a comprehensive estate plan that safeguards your financial security and protects your assets from nursing home costs.
Learn more about Estate Planning.
Real-Life Scenarios and Solutions
A person looking at a real-life scenario and solution
While the strategies and legal considerations discussed in this blog post lay a solid foundation for asset protection, it’s essential to recognize the uniqueness of each individual’s situation. Real-life scenarios related to nursing home costs, such as:
high monthly costs
lifetime risk and savings decisions
Medicare coverage limitations
can further complicate the process of protecting your assets.
Examining real-life scenarios and solutions allows us to gain a deeper understanding of the importance of planning and the effectiveness of various strategies for asset protection against nursing home costs.
In the following case studies, we will explore the experiences of two families who successfully protected their assets from nursing home costs through careful planning, legal consultation, and the strategic use of asset protection strategies.
Case Study 1: The Smith Family
The Smith family, comprised of John and Mary and their adult child Janerio, faced the challenge of protecting their assets from nursing home costs. The Smith family effectively safeguarded their resources from nursing home costs through estate planning that included a ladybird deed and elder-law centered powers of attorney.
This case study serves as an illustration of how families can successfully preserve their assets from nursing home costs through careful planning and the strategic use of various asset protection strategies. Exploring the experiences of the Smith family offers valuable insights into the importance of planning and the effectiveness of diverse strategies for asset protection against nursing home costs.
Case Study 2: The Johnson Family
The Johnson family, including Jane and her adult children, faced several challenges in protecting their assets from nursing home costs. These challenges included:
Owning a home located outside the state
Possessing a considerable amount of assets
Having made previous gifts
Requiring specialized care
The Johnson family successfully safeguarded their out-of-state home and additional cash through careful planning and utilization of various asset protection strategies, including a Medicaid-qualified annuity and a Medicaid asset protection trust.
By strategizing, the Johnson family was able to deposit an extra $125,968.00 into an irrevocable trust, effectively protecting their assets from nursing home costs.
This case study underscores the importance of planning and the efficiency of diverse strategies for asset protection against nursing home costs, even under challenging circumstances.
In conclusion, protecting your assets from nursing home costs is achievable through careful planning, consultation with elder law attorneys and estate planning professionals, and using various asset protection strategies strategically.
By understanding the risks associated with nursing home costs, exploring different strategies such as long-term care insurance, irrevocable trusts, powers of attorney, and Medicaid asset protection trusts, and examining real-life scenarios and solutions, you can develop a comprehensive plan to safeguard your financial security and ensure you receive the care you need without sacrificing your hard-earned assets.
Are you ready to take control of your future and protect your assets from nursing home costs?
Contact the Family & Aging Law Center today: (248)278-1511
Frequently Asked Questions
How can I protect my money before going to a nursing home?
Secure your financial legacy by exploring options such as long-term care insurance, Medicaid-compliant annuities, irrevocable trusts and life estates.
Can Medicare take your house in Michigan?
Unfortunately, the state of Ohio may take your house to pay your Medicaid (not Medicare) bills after you pass away as a result of the required Medicaid estate recovery program. Estate planning can be complex, and it's essential to understand this risk.
Can a nursing home take your IRA in Michigan?
In Michigan, all IRA accounts are considered a countable asset. Therefore, without planning, your IRA will be considered a non-exempt asset and subject to the spend down.
What are the average costs of nursing home care?
On average, nursing home care costs around $7,908 per month for a semi-private room and $9,034 per month for a private room.
Can I qualify for Medicaid without doing a full spend down?
Yes, qualifying for Medicaid without doing a full spend down by protecting assets such as your home is possible.