The cost of nursing home care in the United States can be significant, often reaching tens of thousands of dollars annually. Many individuals are unaware of the potential risks to their assets when planning for long-term care. However, with proper planning and legal strategies, it is possible to protect your assets while ensuring that you or your loved ones receive the necessary care. Below are six essential steps you can take to protect your assets from the high costs of nursing home care.
Medicaid is a government program that can help cover the costs of nursing home care for eligible individuals. However, the program has strict eligibility requirements, including income and asset limits. One of the most common ways to protect assets is through Medicaid planning, which involves restructuring your finances in a way that allows you to qualify for Medicaid while preserving as much of your wealth as possible.
- Spending Down: This strategy involves reducing your countable assets to meet Medicaid’s eligibility requirements. However, there are rules about gifting and transferring assets that must be followed to avoid penalties.
- Irrevocable Trusts: An irrevocable trust can be used to transfer assets out of your name, effectively removing them from your estate for Medicaid eligibility purposes. The trust must be set up far in advance of needing care because Medicaid has a “look-back” period (usually five years) to scrutinize asset transfers.
It’s essential to work with an attorney specializing in elder law and Medicaid to navigate this process and avoid costly mistakes.
