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02.05.20   |   Insights

The Truth about the Medicaid Spend-Down: You Don’t need to “Lose” all of Your Assets to the Rest Home

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Today in America we are living much longer than before and with that comes extended long-term care during our last years of life. Many of us know that the high costs of long-term care in Ohio average about $7,000 PER MONTH.

Most are worried that they will quickly see their hard-earned life savings disappear with little to show for it. Many are sure there is simply nothing that can be done to maximize our hard-earned savings for us and our families. A lot of us think that if we did not have a plan in place by the time someone requires nursing home care, it is too late.

It is not too late to plan!  Whether you are being proactive as you enter retirement or are responding to a crisis (such as a fall, stroke, or diagnosis), there is planning that can be done to help PROTECT your hard-earned assets.

For those being proactive, a very helpful and commonly used tool is an irrevocable asset protection trust. A trust is an agreement whereby trust assets are managed by a trustee and held for the benefit of trust beneficiaries. Let’s say, for example, you have a piece of real property or family home that has been in your family for years and you would like to pass this down to your children. You may have heard of simply “gifting” this property to your children. However, this can create tax and liability issues. Instead of creating these risks, you can set up an irrevocable asset protection trust and appoint one of your children as trustee. Your real property is held for you during your lifetime but after the real property has been titled to your trust for five years, it is “protected” from any nursing home or other long-term care expenses. Once the five years have passed, your real property is still titled to your trust and held during your lifetime, but after your passing, the real property can go to your children, tax-free. This type of asset protection trust planning can be used for other assets as well such as banking accounts, life insurance, or investments.

For those responding to a crisis situation, there are still many planning tools that we can use to help. Sometimes an asset protection trust is used and sometimes other planning techniques are used to maximize the assets for the benefit of you and your family. It is important to keep in mind that there is usually a variety of options available, and you should choose the option with which you feel the most comfortable. If you choose to work with an attorney for Medicaid crisis planning you will want to work with an attorney experienced in “elder law.” The experienced elder law attorney will discuss your family situation (relationships, concerns, blended family issues, disabled child, etc.), income and assets, and your ultimate goals. One way to find out if your attorney practices elder law is to ask how many Medicaid applications that attorney has filed that year. Next, you want to follow up with asking how many of those applications have been successful. Finally, you want to ask about the average time it took that attorney to see the application processed from start to finish.

If you are or a loved one is seeking to proactively plan or are reacting to a crisis, the qualified elder law attorneys at Critchfield, Critchfield & Johnston, Ltd. are happy to sit down with you and figure out the best plan for your needs. Please do not hesitate to reach out to any of our offices for assistance.

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