Estate Planning
FINANCING NURSING HOME CARE
Nursing homes are extremely expensive and Medicare does pay the bill. Most people need Medicaid assistance. Medicaid is the Federal benefits program that assists older the poor, the aged and the disabled who are need. Medicaid also covers long term nursing care.
In order to qualify for Medicaid, an individual may own no more than a home, personal belongings, a car worth a nominal amount and have little savings. The applicant can also only earn a few hundred dollars per month. The precise levels of income and resources that a Medicaid applicant may maintain and still qualify for Medicaid are set by the individual states.
If an individual needs nursing home care and does not qualify for Medicaid, his assets may be quickly exhausted and his heirs will not receive an inheritance. Given these circumstances, it is understandable that the focus of Medicaid planning has been on the reduction or the spending down of assets. This process enables one to live in a nursing home without spending monies saved over a long course of time.
The primary obstacle to the impoverishment strategy is raised by the Medicaid look back rules. If an asset is given away or sold by the Medicaid applicant for less than its fair market value, the Medicaid administrator must still count the transferred asset along with the Medicaid applicant's other assets if the transfer was made within thirty-six months (three years) preceding the date of the application. The look-back period is 60 months (five years) for assets transferred to a trust for less than fair market value. When such transfers are added back, many Medicaid applicants are denied benefits for long periods of time, resulting in their inability to seek nursing home care.
The rules for calculating the waiting period are complex, but are generally intended to delay the application for Medicaid benefits until the look-back period is free of transfers that were for less than fair market value. The greater the value of the transfers that have occurred during the look-back period, the longer the period of ineligibility for Medicaid benefits.
Notably, the transfer of a home for less than its fair market value to the following is an exception. You can transfer to: (1) your spouse; (2) child under the age of twenty-one; (3) disabled child; (4) home care provider; or (5) Sibling who has an equity interest in the home.
Other assets are exempt from the look back rules if they are transferred to the following individuals: (1) spouse; (2) a child under the age of twenty-one; (3) a disabled child; or (4) in trust for the sole benefit of a disabled individual who is younger than sixty-five.
It is important as part of estate planning to start transferring any significant assets to your loved ones at an earlier age before reaching nursing home age. For more information and estate planning, please contact SSB&W.
WILLS
It is always important to have your financial affairs in order regardless of your age. Tragic events occur all the time, leading to split-second decisions involving your estate. A terminal illness, or becoming incapacitated could eliminate your previous intentions and can cloud your best judgment.
When considering the development of an estate plan, remember that there are no small estates. Everyone need an estate plan, especially if there wishes that you desire carried out after you have passed away.
A will provides instructions for the distribution of your property, payment of your debts, selection of an executor for your estate, and possible guardianship of your minor children.
Without a will, you relinquish your right to decide who inherits your property, or what happens to any minor children. Dying without a will could not only be costly, but it could complicate the transfer of your property or guardianship of minor children.
LIVING WILLS
When someone becomes terminally ill, or is in a vegetative or comatose state with little hope of recovering, it is a living will that instructs doctors or his loved ones to withhold life support equipment including artificial hydration and nutrition devices. The living will is typically drafted separately from the standard will and it should be redone periodically to comply with state law.
DURABLE POWER OF ATTORNEY
The law allows you to appoint someone as your attorney-in-fact with the authority to perform certain duties for you, such as paying bills, filing insurance claims, and performing most of your financial activities. If you are not capable of handling your own affairs, a court hearing will appoint someone to do so. Therefore, it is important to have someone appointed in that capacity prior to becoming physically incapacitated.
HEALTH CARE POWER OF ATTORNEY
This document allows someone to only make health care decisions for you when you cannot communicate your wishes to your doctor. This document is more limited than living wills or durable power of attorneys, for it only relates to health care decisions.
For more information regarding wills or estate planning, call SSBWV&G for a free consultation.
