Long-Term Care Costs and Your Estate Plan
There are many misunderstandings about long-term or nursing home care and how to plan from a financial and legal standpoint. The article “Five myths about nursing home costs and estate planning” from The Sentinel seeks to clarify the facts and dispel the myths. Some of the truths may be a little hard to hear, but they are important to know.
Myth One: Before any benefits can be received for nursing home care, a married couple must have spent at least half of their assets and everything but $120, 000. If the person receiving nursing home care is single, they must spend almost all assets on the cost of care, before they qualify for aid.
Fact: Nursing homes have no legal duty to advise anyone before or after they are admitted about this myth.
Several opportunities to spend money on items other than a nursing home, include home improvements, debt retirement, a new car and funeral prepayment. An elder law attorney will know how to use a Medicaid-compliant annuity to preserve assets, without spending them on the cost of care, depending on state law.
There are people who say that an attorney should not help a client take advantage of legally permitted methods to save their money. If they don’t like the laws, let them lobby to change them. Experienced elder law and estate planning attorneys help middle-class clients preserve their life savings, much like millionaires use CPAs to minimize annual federal income taxes.
Myth Two: The nursing home will take our family’s home, if we cannot pay for the cost of care.
Fact: Nursing homes do not want and will not take your home. They just want to be paid. If you can’t afford to pay, the state will use Medicaid money to pay, as long as the family meets the eligibility requirements. The state may eventually attach a collection lien against the estate of the last surviving homeowner to recover funds that the state has used for care.
A good elder law attorney will know how to help the family meet those requirements, so that the adult children are not sued by the nursing home for filial responsibility collection rights, if applicable under state law. The attorney will also know what exceptions and legal loopholes can be used to preserve the family home and avoid estate recovery liens.
Myth Three. We’ve promised our parents that they’ll never go to a nursing home.
Fact: There is a good chance that an aging parent, because of dementia or the various frailties of aging, will need to go to a nursing home at some point, because the care that is provided is better than what the family can do at home.
What our loved ones really want is to know that they won’t be cast off and abandoned, and that they will get the best care possible. When home care is provided by a spouse over an extended period of time, often both spouses end up needing care.
Myth Four: I love my children equally, so I am going to make all of them my legal agent.
Fact: It’s far better for one child to be appointed as the legal agent, so that disagreements between siblings don’t impact decisions. If health care decisions are delayed because of differing opinions, the doctor will often make the decision for the patient. If children don’t get along in the best of circumstances, don’t expect that to change with an aging parent is facing medical, financial and legal issues in a nursing home.
Myth Five. We did our last will and testament years ago, and nothing’s changed, so we don’t need to update anything.
Fact: The most common will leaves everything to a spouse, and thereafter everything goes to the children. That’s fine, until someone has dementia or is in a nursing home. If one spouse is in the nursing home and receiving government benefits, eligibility for the benefits will be lost, if the other spouse dies and leaves assets to the spouse who is receiving care in the nursing home.
A fundamental asset preservation strategy is to make changes to the will. It is not necessary to cut the spouse out of the will, but a well-prepared will can provide for the spouse, preserve assets and comply with state laws about minimal spousal election.
When there has been a diagnosis of early stage dementia, it is critical that an estate planning attorney’s help be obtained as soon as possible, while the person still has legal capacity to make changes to important documents.
The important lesson for all the myths and facts above: see an experienced estate planning elder law attorney to make sure you are prepared for the best care and to preserve assets.
Reference: The Sentinel (May 10, 2019) “Five myths about nursing home costs and estate planning”