LONG-TERM CARE PLANNING

According to the U.S. Department of Health and Human Resources, someone turning age 65 has almost a 70% chance of experiencing a long-term care event in their remaining years. No one enjoys considering the possibility of spending time in a nursing home. But planning is essential because an extended nursing home stay can wipe out a family's life savings. 

Nursing Home Costs

The cost of a nursing home stay depends on the city, level of care, and length of the visit. Georgia nursing homes cost an average of $6,175 per month, per person. Based on these numbers, a married couple in the nursing home can expect to pay over $12,000 per month. 

Unless you have a long-term care insurance policy, you must pay for these costs yourself. When you have less than $2,000, you can qualify for Medicaid to pay for the nursing home. Alternatively, you can plan ahead. Work with an experienced attorney when developing a long-term care plan.

MEDICAID PLANNING

You can protect your assets while simultaneously qualifying for Medicaid coverage to pay for long-term care expenses. Every Medicaid applicant's situation is unique. Also, Medicaid eligibility rules change every few years, making it increasingly difficult to protect your assets and qualify for Medicaid. Work with an experienced Georgia estate planning attorney when developing a long-term care plan.

You can protect your assets while simultaneously qualifying for Medicaid using one (or a combination) of the following methods:

OWNING EXEMPT ASSETS

A Georgia Medicaid applicant can have no more than $2,000 of “countable resources” if the applicant is single, $3,000 if the applicant is married and the spouse is also in a nursing home, or $123,600 if one spouse remains in the community. By transferring countable assets into non-countable assets, you can qualify for Medicaid.

Countable assets include (but are not limited to) cash, bank accounts, certificates of deposits, IRAs, 401(k)’s, stocks, bonds, lump sum annuities, cash value in life insurance policies, homes valued at less than $560,000 each, real estate other than your primary residence, business interests, and assets that can be converted to cash.

GIFTS

The IRS allows you to give up to $15,000 per person per year free of gift tax (as of 2018). If both spouses join in the gift, you can give up to $30,000 per person a year, gift tax‐free. 

But while the IRS allows gifts up to $15,000 per person per year free of gift tax, Medicaid applies a transfer penalty for gifts or transfers made within five years. Any transfer during this period disqualifies the applicant for Medicaid until the penalty period expires. 

Second, remember that things don't always go as planned. Some give money to their children with the expectation that the children will hold it for the parent's benefit. Outright gifts are vulnerable to the child’s poor financial decisions, divorce proceedings, lawsuits, and creditor claims. Furthermore, if the child passes away first, it leaves the parent stuck trying to retrieve the money from the child's heirs.

IRREVOCABLE LIVING TRUST

Transferring your assets to an Irrevocable Living Trust exempts those assets from Medicaid Estate Recovery. This type of Trust also allows you to maintain more control over those assets than if you gifted them during your lifetime. The Irrevocable Living Trust also avoids certain taxes, such as the capital gains tax, by allowing your beneficiaries to inherit from you. 

Irrevocable Living Trusts are a popular Medicaid Planning tool. You can protect your assets by transferring your countable resources out of your name into this type of Trust at least 5 years before you go into a nursing home.

To learn more about the Irrevocable Living Trust or any of these Medicaid techniques, contact an estate planning attorney from our office today. 

To learn more about the Irrevocable Living Trust or any of these Medicaid techniques, contact an estate planning attorney from our office today.