Estate Planning and Medicaid Options

 Posted on December 28, 2015 in Estate Planning

Many Americans go through their adult life working hard and saving money with the goal to enjoy a comfortable retirement. Unfortunately, at some point in their senior years, it becomes too difficult for many people to live at home—a decision is ultimately made that that living in a nursing home is the safest and best option. However, nursing homes are expensive and Medicaid will only cover costs for people who all into the low-income category.

For those seniors who worked hard and saved their money, nursing home costs can quickly annihilate savings. This can be especially troubling when for elderly couples when one spouse is still healthy and is able to live on his or her own. Still, what will that spouse use to live on if nursing home costs for the other spouse is eating up all their money?

In order for a person to qualify for Medicare, individuals cannot have more than $2,000 in countable assets. These assets include:

• Certificates of deposit;
• Checking accounts;
• Savings accounts;
• Stocks and bonds;
• Property besides a person's primary residence; and
• Any more than one motor vehicle.

Besides a home and one vehicle, Medicare also considers personal belongings, household furniture, and other items as non-countable assets. Medicare also allows prepaid funeral expenses and burial expenses up to $1,500 as non-countable assets.

If a person is married, then the amount the person is allowed to have as countable assets is one-half of the couple's joint assets plus $2,000. For example, if a couple's countable assets total $50,000 when one of them enters a nursing home, then Medicaid will start paying for that spouse's nursing home costs when the couple's assets have reached $27,000. This figure represents $2,000 for the spouse who is in the nursing home and $25,000 (half of the $50,000) for the other spouse.

Many seniors who are still in good health begin preparing early for what may be the inevitable in order to ensure that nursing home costs will not eat up their estate. One options many people consider is to put their assets into irrevocable trusts.

There are both pluses and downsides to an irrevocable trust, so it is important to discuss   the considerations and possible ramifications with a qualified DuPage County estate planning attorney. Contact the law firm of Stock, Carlson & Asso. LLC, at 630-665-2500.

Sources:

http://longtermcare.gov/medicare-medicaid-more/medicaid/medicaid-eligibility/financial-requirements-assets/

http://money.usnews.com/money/personal-finance/articles/2015/04/14/some-dos-and-donts-of-a-medicaid-spend-down