A recent Bloomberg View article explores the implications of General Electric’s multi-billion dollar losses from its long term care insurance unit and the challenge of caring for an aging population. In “What’s Bad for GE Will Be Worse for America”, the article opines: More
Plan Your Estate
- Changes in Elder Law
- Estate Planning Documents
- Long Term Care Insurance
- Plan Your Estate
- Senior Care
- Social Security
- Special Needs Trust
- Veteran's Benefits
Imagine purchasing a long term care insurance policy to protect against the cost of in-home, assisted living and nursing home costs and 20 years later, the insurance company has informed you of a significant premium increase. Now that you are in your late seventies and unable to purchase a new policy, you have really only two options: pay the higher premiums (if you can afford to) or cancel the policy. If you cancel the policy, how do you protect your estate if you should need long term care? A recent Wall Street Journal (“Millions Bought Insurance to Cover Retirement Health Costs. Now They Face an Awful Choice”) explains the impact on families facing these increases in long term insurance premiums. More
Protecting assets from nursing home expenses is an issue that I am frequently asked about. Sometimes it may arise after a heart attack, stroke or other concern. Other times it may arise after a loved one moves into an assisted living facility or nursing home due to Alzheimer’s. Whatever the motivation, it is topic that is full of misunderstanding and misinformation. After 25 years of practicing law, I have heard numerous clients repeat things they were told or read regarding the Medicaid rules that are entirely incorrect.
One common area of misunderstanding is whether a trust will protect assets if nursing home care is needed. Just recently a client shared that his mother’s primary motivation in establishing a revocable trust some 20 years ago was to protect her assets in the event she required nursing home care. Unfortunately, with his mother now 87 years old and beginning to exhibit signs of dementia, I had to advise the client that her assets are not protected by her revocable trust. Here are some basic principles to help you avoid a similar mistake.
- A revocable trust will not protect assets from nursing home costs. The primary purpose of a revocable trust is to provide for the administration and distribution of the trust assets upon the death of the trustor (i.e. the trust creator). Since the trustor created the trust, can amend or revoke it, and can ordinarily use the assets for his or her benefit, the trust assets are not protected from nursing home expenses.
- An irrevocable trust will protect assets from nursing home costs. An irrevocable trust will protect assets from nursing home care expenses. However, there are some important caveats that must be understood regarding irrevocable trusts.
- Loss of control. For an irrevocable trust to protect assets, the trustor cannot have the use of or control of the trust assets. Generally, an irrevocable trust is only a viable option for someone who has assets that they are willing to give away and do not expect to need them for his or her living expenses.
- Five year look back period. Not only must control be relinquished over the assets, it must be done at least five years before a Medicaid application is filed. Because transferring assets to an irrevocable trust is considered divestment, it is subject to a five year look back period. As a result, it is generally not a viable strategy for someone who has been diagnosed with Alzheimer’s or other neurocognitive disease.
Protecting assets from Medicaid and nursing home expenses is a complicated topic. Be sure to seek advice from an experience elder law attorney.
Michigan Elder Lawyer Caregiving, Changes in Elder Law, Economy, Estate Planning Documents, Long Term Care Insurance, Medicaid, Plan Your Estate, Senior Care, Social Security, Special Needs Trust, Veteran's Benefits 0
I’m often asked if I specialize in elder law. Not only do I answer “yes”, I typically try to explain the reason for my answer. While there are many attorneys who claim to be elder law attorneys, certainly not all specialize in it. I believe an attorney who claims to specialize in elder law should devote a high percentage of his or her practice to elder law and have done so for a number of years. Like any other specialty, elder law cannot be learned in a few months or years. More
Assisted living is a growing industry. According to the Centers for Disease Control and Prevention, as of 2014, 835,200 older Americans resided in assisted living facilities, an increase of over 100,000 residents in just four years. For many older Americans, assisted living offers hope of receiving help with meals, medications or other activities of daily living while still maintaining some independence.
However, older Americans have a wide variety of care needs and assisted living facilities vary greatly in the services they provide. The right choice of a facility is critical; a wrong choice can put a loved one at risk. According to a recent Consumers Reports article (“Elder Care and Assisted Living: Who Will Care for You?”), when searching for an appropriate assisted living facility, there are four key questions to consider: More