Long-term Asset Protection Planning
Protecting Your Assets Is our Primary Goal
The greatest financial risk that nearly all seniors in this country face is paying for long term nursing care. With the average cost in Pennsylvania over $120,000 a year, all but the very wealthiest could quickly go through much or all of their life savings merely because they had the misfortune to develop a serious chronic illness. For all practical purposes, the only government benefit program we have that will pay for long-term nursing care is Medicaid, but unlike Medicare, you have to be impoverished before you can be eligible. However, unlike what well-meaning friends may tell you, the Medicaid laws permit seniors to protect a substantial portion of their life savings from this risk. The Law Offices of Schellart Joyce, located in Erie, PA, specializes in long-term care planning, which includes preparing clients to apply for Medicaid.
The Law Offices of Schellart Joyce Helps Provide Options in Long-term Protection Planning
While planning ahead is best, as this gives you more options for protecting your assets with less stress than waiting until a crisis occurs, you need to know that despite the restrictions in the Medicaid law, there are legal options available for nearly all of our clients to protect a significant portion of their life savings, even in a crisis, when a spouse, parent, or other loved one is already in a nursing home.
At our law firm, we work closely with seniors and their families to help them plan for the future and, for those in crisis, to help assure a smooth transition form private pay to Medicaid eligibility, while protecting a significant portion of their life savings in the process. We provide a specialized asset protection package for our clients, which includes:
- Developing an Asset Protection Plan designed to minimize the amount of their life savings at risk of being spent down on long-term nursing care;
- Preparing any legal documents such as Wills, powers of attorney, deeds, or trusts, necessary to carry out the Plan;
- Working with our clients for as long as it takes to ensure that the Plan is successfully carried out; and
- when appropriate, preparing and filing a Medicaid application (with the voluminous required documentation), and acting as our client’s advocate with the Medicaid office.
In this area of the law time works against you, so it is important to contact a knowledgeable and experienced elder law attorney, such as Schellart Joyce, for advice sooner rather than later. Caring for a loved one doesn’t have to cost a lifetime of savings.
Still not sure if you qualify? Contact us today.
Is Medicaid Planning Appropriate?
In our country we do not have a universal healthcare system but rather a hodge-podge of overlapping health-care programs that at times can produce inequitable results. Take, for example, Mr. Smith, who is age 82 and has accumulated a lifetime of savings of $300,000. He required open-heart surgery costing several hundred thousand dollars, but the entire cost was covered by a combination of Medicare and his private Medicare Supplement policy. On the other hand, his neighbor Mrs. Jones, also age 82 and with $300,000 of savings, was diagnosed several years ago with Alzheimer’s disease and has now had to move from her home into a nursing home. In her case Medicare will pay nothing, and — if her family does not consult an elder law attorney — she will go through her entire lifetime of savings in just a few years paying for her care. It seems unfair that Mrs. Jones should be penalized merely because she developed the wrong illness.
But is Medicaid planning appropriate? One judge, in response to the government lawyer’s argument that Medicaid planning was improper, had this to say:
“No agency of the government has any right to complain about the fact that middle-class people confronted with desperate circumstances choose voluntarily to inflict poverty upon themselves when it is the government itself which has established the rule that poverty is a prerequisite to the receipt of government assistance in defraying the costs of ruinously expensive, but absolutely essential medical treatment.”
Matter of Bipin Shah v. Debuono, 694 N.Y.S. 2d 88, 257 A.D.2d 256 (N.Y. App.Div.2nd Dep’t, July 6, 1999) The Medicaid rules, while quite complicated, must nevertheless be strictly followed. With professional legal assistance from The Law Offices of Schellart Joyce, you can qualify for long term care Medicaid benefits while still preserving a substantial part of your assets. It is never too early or too late to start planning. When you need professional guidance, contact our law firm.
The Biggest Misconception about Medicaid and Nursing Homes
“It’s too late to do anything now; we should have done something years ago.” This is the most unfortunate misunderstanding about Medicaid and nursing homes — the nearly universal but mistaken belief that once you are in a nursing home it is too late to protect any assets. While you may have heard this from well-meaning friends or even healthcare professionals, THIS IS NOT CORRECT. About half of the asset planning work we do in our office is for clients who are already in a “crisis” situation – that is, with a loved one who is in or about to enter a nursing home. The Medicaid law permits you to protect a significant portion of your life savings that would otherwise have to be spent down on your nursing-home care, even if you are already in a nursing home.
Nevertheless, there is one simple reason why we are unable to help the great majority of families who have a loved one in a nursing home. It’s not because of the law, or because of their particular situation, but simply because they do not call to ask for help. And the reason they do not call is because they mistakenly believe that it’s too late, that any asset-protection planning had to have been done years ago.
So please remember, it is never too late to call.
That being said, there are certainly advantages to planning ahead:
- you get your documents in place so that if you later, through accident or illness, become mentally incapacitated, you have people in place that you have selected to step in and take care of your financial and legal matters, as well as making personal and healthcare decisions for you to the extent you can’t make these for yourself;
- you increase the likelihood of protecting more of your life savings from the risk of being spent down if you later need long-term nursing care; and
- you avoid the stress of having to make decisions in a crisis situation, when every day of delay may be costing you several hundred dollars.
Protecting Your Home.
Protecting the home is one of the greatest concerns clients have when facing long-term care. If you receive long-term care Medicaid benefits during your lifetime (after age 54), the state Medicaid agency will have a claim against your estate when you die for all the benefits paid out on your behalf. Because nursing homes in Pennsylvania cost on average more than $10,000 a month, this “estate recovery claim” can quickly become quite large. If your home is in your name alone at your death, if will be in your estate and so subject to this claim.
For married couples, if one spouse is in a nursing home while the other spouse (the “community spouse”) continues to live at home, their house is only a risk if the community spouse dies first. So, if John is in the nursing home and his wife Mary is living at home, one of things our law firm would look to do to avoid this risk is get the house into Mary’s name alone and have her make a new Will disinheriting John. (Note: If John is not mentally competent, we might not be able to protect his house unless he has a Financial Power of Attorney in place with adequate “gifting” language.)
If John is single and in the nursing home, we can usually still help protect the home, often by having him transfer a remainder interest in the home to an irrevocable trust while retaining a “life estate” for himself. This can also be a very good way to protect the home for those who are not in a crisis but who want to plan ahead to protect their house. This way of protecting the home has a number of advantages over simply putting the house in the children’s names:
- The parents remain the owners of their home with the security of always having a place to live, without the risk of losing it because of things that might happen to one of the children (such as death, divorce or debt).
- Because the parents owns only a “life estate” in their home, at their death it is automatically in the trust rather than going into the parent’s estate and is thus protected from a Medicaid estate recovery claim.
- While the transfer of a remainder interest is a gift that may result in an ineligibility period for Medicaid, it will be a much shorter period than if the entire home were transferred outright and so result in much less money having to be paid to the nursing home.
Legal strategies for protecting the home vary depending on a client’s particular situation and wishes. A qualified elder law attorney, such as those at The Law Offices of Schellart Joyce, can identify the options that make the most sense for a particular client’s situation, and can draft the documents you need in order to maximize your options and give you greater peace of mind.