It can be hard to believe this statistic when you are a relatively young adult who is perfectly capable of handling your own affairs. However, the cold hard truth is that you will probably need help with your day-to-day needs before everything is said and done. If you visit the website LongTermCare.gov, you will learn that seven out of every 10 people who are reaching the age of 65 will eventually need help with their activities of daily living. Let our Scarsdale nursing home lawyer help you plan for what might come next.
Will you need long-term care services in the future?
Of course, some people can get the help that they need in their own homes from family members and friends. This could suffice for a while in some instances, but nursing home care can be required when the level of assistance that is needed simply exceeds the capabilities of the in-home caregivers.
Medicare coverage will not be sufficient
Many people naturally assume that Medicare would pay for nursing home care if you ever need it, but this is not the case. If you need convalescent care after an illness or injury, the Medicare program would help, but it does not pay for the custodial care that nursing homes and assisted living communities provide.
It is not easy to pay out-of-pocket because nursing homes and assisted living communities are extremely expensive. The costs are high around the country, but they are particularly exorbitant here on Long Island. It can easily cost you well over $100,000 for a year in a nursing home, and people often require multiple years of nursing home care.
Placing your assets in a living trust
You are probably aware of the existence of the Medicaid program. This is a jointly administered federal/state government health insurance program for people with very limited financial resources. The program does pay for long-term care, and a significant percentage of senior citizens rely on Medicaid coverage to pay for their nursing home care.
As we have stated, Medicaid is a need-based program. There is a $2000 limit on countable assets. To qualify for Medicaid to pay for long-term care, people often give gifts to their loved ones before they apply. This process is typically referred to as “spending down.”
How a living trust protects your assets
If you were to use a revocable living trust as an estate planning tool, you may assume that assets in the trust would not be counted toward this $2000 limit if you ever apply for Medicaid. In fact, the assets would be counted. When you establish your living trust, you can, in fact, revoke or dissolve the trust if you ever choose to do so. You can also control the actions of the trust while you are alive because you can act as the trustee.
Since you have this level of control of the assets, you have the power to dissolve the trust and use the assets to pay for nursing home care. As a result, they would be countable assets for Medicaid purposes. With proper Medicaid planning with the help of a Scarsdale nursing home lawyer, you can navigate through these requirements.
Using an irrevocable Medicaid trust
However, there is a different type of trust that can protect assets from nursing home costs. You could convey resources into an irrevocable Medicaid trust. Since you would not be able to revoke the trust and take back direct personal possession of the property, you would be surrendering incidents of ownership. As a result, Medicaid would not count assets that are in this type of trust.
You could potentially choose to create an income only Medicaid trust. While you are living independently, you could receive income from the earnings of the trust, but the principal would not count if you were to apply for Medicaid to pay for long-term care. If you want more information on this option, talk to our Scarsdale nursing home lawyer.
This is the good news but the bad news is that nursing home residents who are enrolled in the Medicaid program have to contribute most of their income toward the cost of the care they are receiving. As a result, the income from the trust would go toward the cost of your care if you ever do qualify for Medicaid to pay for living assistance.
If you have questions regarding Medicaid trusts or any other elder law planning matters, please contact the experienced attorneys at the Law Offices of Mary A. Miller, P.C. for a consultation. You can contact us either online or by calling us at (914) 939-6565. We are here to help!