Getting Nursing Home Care While Preserving Your Family’s Inheritance

The cost of a semiprivate room in a nursing home has shot past $90,000 per year, placing a significant burden on families and threatening inheritances. Families end up needing Medicaid assistance so their loved ones can have long-term care. Working with an estate planning attorney, you can minimize the conflict between Medicaid and your possible inheritance.

Nursing Homes Expect You to Deplete Your Assets

Paying out of pocket for long-term care is simply not an option for most families. However, nursing homes expect that you will pay everything out of your own pocket in the absence of any assistance. The expectation is that a senior depletes all of their assets to finance their long-term care. However, this leaves loved ones depending on inheriting money out in the cold as their parents’ savings must be used in the last years of their lives. Many families will eventually qualify for Medicaid help but only after they have exhausted their assets.

Establishing a Medicaid Trust

There is a way that families can still obtain long-term care for their loved ones while still preserving their assets. However, it requires some forethought and advance planning in order to set up the necessary structures. A common way that families preserve inheritances is by moving assets into a trust in advance of the need for long-term care. Here is how it works.

Medicaid will perform searches of assets before it gives a person any coverage under the system. If you have bank accounts or investment accounts, it will show up under the asset search. Medicaid is going to look to see if you have sold or given away any assets below their value because it would be a sign that you are shifting away money to qualify for government help.

New Jersey Looks Back Five Years

Each state has its own Medicaid rules since the states administer the program. In New Jersey, the look-back rule is five years. In other words, Medicaid will look at your accounts and transactions from the last five years to verify eligibility. If they see any asset transfer in the past five years, they will count that as ownership.

The way to keep assets for your loved ones and still secure Medicaid help with your long-term care costs is by setting up a Medicaid trust. This moves assets out of your name and into the name of the trust. When Medicaid performs an asset search, these assets will not show up as being owned by you. The key here is that you do not retain any ability to make decisions about the property. This now belongs to the trust. Decision-making power is the major indicator of ownership, so you will no longer own the property in the eyes of Medicaid.

The Trust Must Be Irrevocable

It is important to work with an estate planning lawyer so that the trust is established properly. For instance, the trust needs to have the right form. To protect your assets, you would need to set up an irrevocable trust. This means that once you establish the trust and move the assets out of your name, you cannot take them back or change the trust. The ability to revoke the trust still counts as you having control over the assets. Moreover, mistakes made when setting up the trust cannot easily be undone.

It is vital to act sooner rather than later to secure the long-term future of your family. You never know when illness may strike that can require long-term care. However, if your trust is recently set up, you may not be able to qualify for Medicaid. With a trust, you can get nursing home care from Medicaid and take care of your family.

To learn more about how you would establish and fund a Medicaid trust, contact an estate planning lawyer at the Knee Law Firm in Hackensack, NJ. You can reach us at (201) 996-1200 to set up your initial consultation.