What Should I Do to Plan For Long-Term Care? - Part 2

asset protection attorney long-term care nursing home trusts Nov 30, 2016

What Should I Do to Plan For Long-Term Care? - See Part 1

A properly drafted “income-only” trust that gives a Trustee no discretion to distribute principal to the Grantor-Beneficiary, or to his or her spouse, is still a viable long-term care planning tool.


Therefore, a senior doing estate planning may keep the income from an irrevocable, “income only” trust for himself or herself, with the remainder distributable to specific beneficiaries, and qualify for Medicaid (once the applicable “penalty period” has expired) without the assets in the trust being considered by the Department of Human Services as available to pay for the cost of long-term care.

If the home is the only asset to protect, a deed which transfers the property upon death to your trust or your children, will protect the property and the right to Medicaid.  Consideration must also be given to the fact that if the property is sold and the grantor is in the nursing home, the proceeds from the sale will create ineligibility due to excess assets until the money has been spent back down under the asset limit of $2,000.00.

Proper use of the Medicaid transfer rules allows individuals to provide security for themselves and a legacy to their families, while ensuring that they will receive long-term care.  By gifting the appropriate amount of assets, and structuring other asset transfers as an exchange for a secured interest, much like a loan, through the use of a promissory note, private annuity or utilizing the funds contained within an Asset Protection Trust to pay for expenses during the period of ineligibility which is created by gifts, individuals can channel assets to a trust, or to children and grandchildren, while receiving sufficient income through the note or annuity payments to pay for their care until Medicaid is available.


Even if a loved one is already in a nursing home (or it is imminent), planning opportunities still exist to protect a substantial portion of the applicants assets.

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The best advise we can give you is this: Start Planning now. No one knows what the future will bring. The crisis in health care and long-term care will shape public policy for years to come.  It has become clear that long-term care, such as nursing home and home health care, will not be a part of any new universal health insurance program.  The Deficit Reduction Act of 2005 is just the beginning; and there will be continuing pressure to limit expenditures on existing programs, including Medicare and Medicaid.  Within the past year, reform of Medicare, Social Security and Medicaid has risen to the top of the government’s agenda, in Washington, Lansing, and every county in the state.

It is thus imperative that seniors, those approaching retirement age, and the families of those needing long-term care take advantage of the planning opportunities that exist today.  Everyone's situation is unique, and it is impossible to discuss all of the planning opportunities in this guide.  As with any planning, a good way to begin is to seek competent advice from a qualified professional.  We are dedicated to helping you find solutions to your long-term care concerns and to assist you in avoiding the loss of your lifetime savings.

The information in this blog is not intended to be, nor should it be, construed as legal advice. It is for informational purposes only. For advice, specific to your situation, consult with a qualified attorney.