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Estate Planning Blog Articles

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Should You Put Your Home in a Trust?

If you own a home, you know your name on the title proves ownership. If you decide you’d like to transfer ownership, the name on the title changes. According to an article from ABC 45 News, “How, and why, to set up a trust for your house,” you can transfer ownership of your home to a real estate trust.

One of many reasons to put your home into a trust is to make it easier for your executor and heirs if your estate plan includes passing the home to your children. Transferring your home to a real estate trust involves certain legal and tax benefits. Here’s a look at why this might be something to discuss with your estate planning attorney.

First, what is a real estate trust? A real estate trust is a trust designed to own real estate property, which is transferred into the trust by retitling the deed. Once this is done, like any other trust, the asset—the real estate property—is managed by the trustee for the benefit of the grantor and beneficiaries.

In some jurisdictions, you may need to have a new deed created—your estate planning attorney will know how it works in your region. The deed is then recorded with the local county recording office.

In most cases, the home’s original owner names themselves as the trustee to maintain control of the property, although someone else can be named as a trustee. An adult child is often named as the trustee if the original owner is ready to take this step.

Trusts have many applications for estate planning as well as tax planning and asset protection. Depending on the type of trust your estate planning attorney determines is best, a trust can be established to protect the home from creditors as well as passing directly to heirs without needing to go through probate court.

If you need a revocable or living trust, the grantor (the person who creates the trust) can make changes or even close the trust at any time. This is appealing to some people because they want to be able to be in charge. When the grantor dies, the property is distributed to beneficiaries according to the directions in the trust.

If you put your home in an irrevocable trust, the asset is protected against lawsuits and creditors. The same protection doesn’t extend to a revocable trust, however. The irrevocable trust may be eligible for a stepped-up basis on the grantor’s death, reducing estate taxes and capital gains taxes when the property is sold, if all required conditions are met.

Trusts are a popular means of circumventing the need to go through probate court, which can cost thousands and take months or years to complete.

Senior homeowners should consult with an estate planning attorney to learn how placing their home in a trust will impact their overall estate plan and Medicaid eligibility. If there is no estate plan currently in place, this is something to address as soon as possible. We don’t know what the future holds, but we do know that having an estate plan provides peace of mind for all concerned.

Reference: ABC 45 News (March 14, 2025) “How, and why, to set up a trust for your house”

Will Inflation Have an Impact on Your Estate Plan?

Inflation can add some twists and turns to your estate plan by increasing asset values and living costs. There are strategic moves to make if inflation is a concern, says a recent article, “4 Ways Inflation Can Change Your Estate Planning” from MSN. If you don’t already have an estate plan, now is the time to create one to protect your legacy.

If one of your estate plan goals is to make generous bequests to help loved ones, the amount you had once intended for them might not be enough. Start by checking how much inflation has eroded your bequest and if you can, adjust the amount based on current costs.

Another way to overcome inflation in bequests is to add assets to the estate that grow over time. These may include index funds or real estate property. Talk with your estate planning attorney about what kinds of assets you currently own and which could work best for inheritances.

While inflation pushing up real estate is good news for property owners, it can raise your estate’s total value. If the threshold for federal estate tax exemption changes, which is yet a big unknown, your heirs may end up with a tax burden instead of a windfall.

This can be addressed by moving assets to loved ones while you’re still living, which could keep your estate under certain tax thresholds. Irrevocable trusts, including a Spousal Lifetime Access Trust or a Grantor Trust, can also be used to move appreciating assets out of your estate. This works to lower potential estate taxes. An experienced estate planning attorney can help determine how your estate is best structured to minimize taxes on a federal and state level.

Increasing healthcare costs are taking a big chunk out of everyone’s pockets, as is the cost of long-term care. If your plan is to pay for a loved one’s medical costs or pay for your own long-term care, you want to protect your funds.

Long-term care insurance policies are costly. However, coverage could prevent your heirs from having to pay for those costs for you. Most insurance companies offer LTC plans as part of a hybrid life insurance plan, making coverage possible. If you expect to apply to Medicaid at some point for yourself or a loved one, this is something to plan for well before you need it. Medicaid has a five-year look-back period, and any wealth transfers made within that time will make you ineligible for coverage.

You should also be sure your estate plan is up to date. If you don’t already have healthcare powers of attorney and living wills set up in advance, meet with an experienced estate planning attorney.

Reference: MSN (April 12, 2025) “4 Ways Inflation Can Change Your Estate Planning”

Just the Facts on Estate Planning

While you do need an estate planning attorney to prepare an estate plan properly, you don’t need to go to law school to understand basic facts about estate planning. As reported in a recent article from the Pauls Valley Democrat, “Some real facts about estate planning,” getting the right information on estate planning basics can alleviate unnecessary anxiety and help resolve concerns.

You can use a trust to avoid taxes. Well, not always. Creating a trust alone doesn’t save taxes. It depends upon the type of taxes being discussed—income taxes, federal estate taxes, state estate taxes, or inheritance taxes—and the type of trust being created.

The person who establishes the trust, known as the grantor, pays income tax on a revocable living trust. If the trust is an irrevocable trust, income held in the trust will be taxed at rates near the highest individual tax rate.

Trusts do offer possible estate tax savings, depending upon the type of trust and how it’s structured. However, estate taxes aren’t even a concern for most people, since an individual must own more than $13.9 million of assets at the time of their death before any federal estate tax applies. Whether or not this historically high exemption level remains after December 31, 2025, is still unknown and you should speak with your estate planning attorney to be sure you are prepared if your estate is near the $7 million level just to be sure.

The heir pays estate taxes. Not always. Beneficiaries don’t pay the estate tax. The estate pays federal and state estate taxes. Federal estate taxes apply only to the estates of people with large amounts of wealth, who have likely done the proper estate planning to avoid paying estate taxes in the first place.

If you live in one of the few states with an inheritance tax, then you’ll pay inheritance tax based on the laws of your state.

If inherited assets include a large amount of appreciation, there won’t be any capital gains taxes paid because the recipient receives the assets at their fair market value at the date of death. For example, let’s say your mother dies owning $100,000 of land, which she bought in 1958 for $10,000. If she sold the land, she’d pay capital gains tax on $90,000. However, her heir’s basis is $100,000, and they could sell the land for $100,000 and pay no taxes.

The best way to avoid worrying about estate planning is to schedule a consultation with an experienced estate planning attorney and discuss your unique situation. They’ll be able to create a plan to minimize your taxes, discuss whether a trust would be appropriate for you and your heirs, and give you the peace of mind that comes with knowing you’ve taken care of yourself and the next generation.

Reference: Pauls Valley Democrat (April 11, 2025) “Some real facts about estate planning”

Does Your Estate Plan Consider the Needs of a Disabled Beneficiary?

Estate planning addresses all kinds of events in life, and planning for a disabled beneficiary, even someone who has been well all their lives, should be considered when creating an estate plan for your family with an estate planning attorney. What one needs to do is different in every situation, according to a recent article, “Some estate plans need provisions for disabled beneficiaries,” from The News-Enterprise.

For families with a long-term disabled individual, one course is to create a Third-Party Supplemental Needs Trust, sometimes referred to simply as a Special Needs Trust or SNT. This is a type of trust meeting the needs of most disabled individuals. It is used to hold property for a disabled person’s benefit without the assets in the trust being treated like their own, maintaining their eligibility for government means-tested benefits.

SNTs are effective even after the disabled beneficiary’s death. Created correctly, they can be used to receive the beneficiary’s inheritance. Because the inheritance is never owned by the beneficiary, there is no payback to the state after the person has died. The assets remaining in the trust are then paid to the beneficiaries.

Supplemental Needs Trusts may hold a variety of assets. They are often used to hold liquid assets like investment, checking and savings accounts. However, they may also hold real estate, business interests and retirement accounts.

When planning for disabled beneficiaries, each asset should be considered to see if it should be left in trust or outright for the disabled beneficiary. Even exempt assets, like a house, are better left in trust than owned outright. There is a payback provision of the beneficiary’s owned assets after their death, while assets owned by a third party—the trust—are exempt from the payback.

Assets to be placed in SNTs need to be carefully considered with the help of an experienced estate planning attorney. For instance, retirement accounts technically may be in the trust. However, they are “tax-heavy,” and requirements concerning beneficiary distributions are complicated.

By including a Supplemental Needs Trust designed to become effective only if the beneficiary needs it at the time of distribution, you can protect the beneficiary if it becomes necessary.

People often run into trouble because they fail to imagine life’s many different circumstances. Even if you don’t think there will be any disabled beneficiaries, discuss a contingency plan with your estate planning attorney. It’s at least worth having the conversation and could make a big difference for you and your loved ones.

Reference: The News Enterprise (March 22, 2025) “Some estate plans need provisions for disabled beneficiaries”

An Elder Law Attorney Can Help Navigate Social Security Benefits

Social Security is a vital source of income for millions of retirees. However, the system’s complexity often leaves people uncertain about how to maximize their benefits. From determining the best time to claim benefits to understanding taxation and spousal eligibility, making incorrect choices can result in a reduced lifetime income and unexpected financial burdens.

An elder law attorney can help individuals and families navigate Social Security rules, ensuring that retirees receive the benefits they are entitled to, while coordinating them with other financial and estate planning strategies.

Determining Eligibility and Maximizing Benefits

Social Security eligibility is determined by a person’s work history, earnings and age at the time of filing. Individuals can begin claiming benefits as early as age 62. However, doing so results in permanently reduced monthly payments. On the other hand, delaying benefits past full retirement age (typically 66 or 67) results in a higher monthly payout.

An elder law attorney can analyze an individual’s financial situation to determine the optimal time to claim benefits. For married couples, strategies such as spousal benefits and survivor benefits can be used to increase total household income. Understanding how to structure claims for a higher-earning spouse versus a lower-earning spouse can have a significant impact on long-term financial security.

Social Security and Tax Implications

Many retirees are surprised to learn that a portion of their Social Security benefits may be subject to federal income tax, depending on their overall income. Up to 85% of benefits can be taxed if an individual’s combined income exceeds certain thresholds. This includes wages, pensions, withdrawals from retirement accounts and investment income.

An elder law attorney can help develop tax-efficient strategies, such as adjusting withdrawal schedules from 401(k) or IRA accounts to minimize taxable income. Proper planning can ensure that retirees keep more of their Social Security income, while staying in a lower tax bracket.

Social Security Benefits for Spouses, Widows and Divorced Individuals

Social Security rules provide benefits not just for workers but also for their spouses, widows and even former spouses. Spousal benefits enable a lower-earning spouse to receive up to 50% of the higher-earning spouse’s benefit, providing a significant financial advantage.

Widows and widowers can claim survivor benefits, allowing them to receive their deceased spouse’s full benefit if it is higher than their own. Divorced individuals may also qualify for benefits based on an ex-spouse’s earnings, provided they were married for at least 10 years and remain unmarried at the time of filing.

Because these rules can be complicated, an elder law attorney helps individuals determine which benefits they qualify for and how to maximize their payout. Choosing the wrong claiming strategy can result in thousands of dollars in lost benefits throughout retirement.

Appealing Denied Social Security Benefits

Not all Social Security claims are approved on the first attempt. If benefits are denied due to missing paperwork, incomplete applications, or eligibility disputes, an elder law attorney can assist with the appeal process.

The Social Security Administration offers multiple levels of appeal, including reconsideration, administrative hearings and federal court review. Without legal guidance, many applicants struggle to present the necessary medical or financial evidence to reverse a denial. An elder law attorney understands how to structure appeals effectively, ensuring that eligible individuals receive the benefits to which they are entitled.

Coordinating Social Security with Other Retirement Income

For most retirees, Social Security is just one part of a broader financial picture. An elder law attorney helps integrate Social Security benefits with pension distributions, investment income and estate planning strategies to ensure long-term financial stability.

Proper planning can help retirees:

  • Avoid excessive taxes on Social Security income
  • Ensure that benefits continue for a surviving spouse or dependent
  • Structure distributions from retirement accounts in a way that preserves government benefits

By taking a comprehensive approach, an elder law attorney ensures that Social Security benefits work in tandem with other financial assets to provide a secure and sustainable retirement.

Key Takeaways

  • Social Security claiming decisions impact lifetime income: An elder law attorney helps determine the optimal time to file for benefits.
  • Spousal and survivor benefits can provide additional income: Understanding eligibility rules ensures that married, widowed and divorced individuals receive their full entitlement.
  • Taxes can reduce Social Security payouts: Strategic financial planning minimizes tax liabilities on benefits.
  • Legal assistance is critical for appealing denied claims: An attorney can guide individuals through the appeals process to secure rightful benefits.
  • Social Security should be coordinated with other retirement income sources: Proper planning ensures financial stability in retirement.

References: Super Lawyers (May 7, 2024) “How Do You Become Eligible for Social Security Benefits?”, Social Security Administration (December 2024) “Your Right to Representation“ and AARP (January 17, 2023) “7 Things to Know About Social Security and Taxes”

How to Create a Comprehensive Estate Plan in Five Steps

Those who live or work in the heart of high-tech corridors are often future-focused, with innovation at the center of their world. However, planning for the future should include estate planning to ensure that assets are distributed according to your wishes, rather than according to the laws of your state. A recent article from Puget Sound Business Journal, “5 essential steps to craft a comprehensive estate plan,” offers the five key steps that every adult needs to take to create an estate plan.

Create an inventory of assets. Today’s inventory includes tech investments, real estate, cryptocurrency, life insurance, retirement accounts, personal property and the contents of a safe deposit box. This information will help your estate planning attorney know what planning tools will best suit you and your family. A complete inventory will also be required by your executor to settle your estate, regardless of how far off that may seem.

Asset ownership and beneficiaries. Knowing what you own and knowing how you own it are two different things. If you live in a community property state, for instance, each spouse owns half of the property purchased during the marriage. However, if you own property as Joint With Right of Survivorship (JWROS), the property will pass to the surviving spouse without going through the will.

Estate planning includes reviewing beneficiary designations. Life insurance, retirement accounts and investment accounts typically allow you to name beneficiaries who will receive the assets directly upon your death. These designations override any wishes expressed in your will. Be sure they are current and review them periodically to ensure accuracy.

Plan for guardianship of minor children. Your will is used to name a guardian for any minor children. If you don’t have a will and you have young children, the court will decide who will raise the children in the event of both parents dying. If you have young children and no will, you must take care of this as soon as possible.

Power of Attorney for Financial and Healthcare Decisions. Part of estate planning is to protect you while you are living, but not able to speak on your own behalf. An estate plan typically includes a Power of Attorney to name someone to manage your financial affairs and a Healthcare Proxy or Healthcare Power of Attorney to designate a person of your choice to make decisions and participate in your medical care in the event of incapacity. Both documents should be crafted to reflect your personal wishes.

Discuss your estate plan with family and advisors. Death and illness are not as pleasant to discuss as your latest exotic vacation. However, it’s important to let certain family members or trusted friends know about your estate plan. For instance, your executor should be aware of the location of your will and the type of memorial you wish to have. Discussing your wishes can help prevent misunderstandings and even litigation.

Estate planning requires maintenance, just like your home or car. As you go through the different stages of life, your estate plan needs to adapt. Conducting a regular review every three to five years ensures that your estate plan accurately reflects your wishes and provides for the care of your loved ones.

Reference: Puget Sound Business Journal (March 17, 2025) “5 essential steps to craft a comprehensive estate plan”

Can I Include Digital Assets in My Estate Plan?

From a bird’s-eye view, digital assets encompass digitally stored documents, electronic communications, loyalty programs, airline miles, photos, videos, social media accounts, cryptocurrencies, subscriptions, online businesses and accounts provided by service providers (e.g., Facebook, Instagram, GoDaddy).

If this sounds overwhelming, imagine how taking care of this asset category will feel to your executor if you haven’t prepared a full inventory as part of your estate plan. A recent article from The National Law Review, “5 Ways Estate Attorneys Can Bring Order to Their Clients’ Digital Asset Chaos,” outlines the necessary steps to organize your digital affairs.

Clarify your digital asset status. In addition to the items listed in the first paragraph, you may own domain names, digital recordings and content, or conduct business on sites such as Amazon, engage in cryptocurrency, NFT, or gaming token transactions, to name a few. If you spend five minutes on the internet, you also have NIL—name, image and likeness, which is a digital identity.

Your estate planning attorney will ask if you use online bill pay for recurring expenses, how you store photos and videos, how extensively you use social media and if you have created a digital inventory in case someone needs to access this information to manage your estate or pay bills in the event of incapacity.

Make an inventory of digital assets. A thorough inventory of digital assets begins with hardware and ends with apps. This includes any devices where you store or access information, such as desktop and laptop computers, tablets, mobile phones, external hard drives, e-readers, digital cameras, gaming devices, smart home systems and flash drives. Cryptocurrency owners will also have online wallets.

Next, map out where data exists. This likely includes cloud services, such as Google Drive and Dropbox, as well as local hard drives, backup systems and applications.

Online accounts and digital assets encompass a wide range, from email to utilities, cryptocurrencies and NFTs, bank accounts, investment accounts, social media platforms, Venmo, PayPal, subscriptions, transportation apps and any other online activity, accessible on any device.

Creating an inventory might be easier if you scan and print emails for receipts and password reset links to uncover any forgotten accounts. While some people no longer print anything, this might be a good exception to make to help your executor’s tasks easier.

Determine your directives for each account. What makes this process more complicated is the different values ascribed to different digital accounts. A long-unused library application, for instance, doesn’t need to be treated in the same manner as the portal where you store your financial information. However, both require attention. Some accounts may need to be deleted in the interest of privacy, while others, like photos and videos, you may want to share with family members. None of this information should be included in your will, which will become a public document.  It should instead be part of a digital estate plan.

Name a savvy executor who is comfortable in the digital world. Identifying traditional assets can be challenging without an inventory. However, identifying digital assets is even more complex: there is no paper trail. For those with significant assets, it may be wise to empower your executor to retain a technical advisor to help unravel a digital estate.

Make it legally binding. A bare-bones estate plan typically includes a will, a revocable trust and financial and healthcare powers of attorney. An estate plan that includes digital assets should provide clear directions about who will manage these assets. Speak with your estate planning attorney about how to maintain the inventory of assets and manage updating it as assets change at a more rapid pace than traditional assets.

Reference: The National Law Review (March 21, 2025) “5 Ways Estate Attorneys Can Bring Order to Their Clients’ Digital Asset Chaos”

Preparing to Move a Loved One to an Assisted Living Facility

Moving a parent or elderly relative into an assisted living facility is a significant life change. While assisted living provides valuable support, many families face challenges when making this transition. Understanding how to prepare both logistically and emotionally can make the process smoother and ensure that the move is beneficial for everyone involved.

Assessing the Need for Assisted Living

Recognizing when a loved one needs assisted living can be difficult. Some seniors may struggle with daily tasks, such as meal preparation, medication management, or maintaining personal hygiene. Others may experience memory issues or social isolation, making it unsafe or unhealthy for them to continue living alone. While family caregivers often step in to help, the demands of full-time care can become overwhelming.

A professional evaluation from a doctor or geriatric care manager can provide insight into the level of care required. This assessment helps families determine whether assisted living is the best option or if alternative solutions, such as in-home care, may be more suitable.

Choosing the Right Facility

Finding the right assisted living community is critical to ensuring a loved one’s safety, happiness, and quality of life. Factors to consider include the level of medical care provided, the availability of social and recreational activities and the overall environment of the facility. Some communities also cater specifically to individuals with conditions such as Alzheimer’s or mobility issues.

Visiting multiple facilities, asking about staff-to-resident ratios and reviewing inspection reports can help families make an informed choice. If possible, involving the loved one in the selection process ensures that their preferences and comfort are considered.

Preparing for the Move

Once a facility has been chosen, preparing for the transition is crucial. Downsizing can be an emotional process, especially if a loved one is leaving a home they have lived in for many years. Deciding which personal belongings to bring requires striking a balance between practical needs and sentimental value. While space may be limited, familiar items such as photographs, favorite furniture, or cherished keepsakes can help ease the emotional impact of the move.

Handling financial and legal arrangements is another critical step. Reviewing contracts, understanding payment structures, and ensuring that the necessary estate planning documents—such as powers of attorney—are in place can prevent complications down the line. Families should also coordinate with the facility to arrange medical care, prescription transfers and any necessary accommodations.

Addressing Emotional Challenges

The emotional adjustment to assisted living can be just as necessary as the physical move. Many seniors fear losing their independence or worry about feeling lonely in a new environment. Open and honest conversations about why the move is happening can help ease these concerns. Reassuring a loved one that assisted living provides a safer and more supportive lifestyle can alleviate some of their anxiety.

Encouraging participation in community activities and social events can help new residents feel more at home. Regular visits and phone calls from family members also play a vital role in ensuring a smooth transition. If signs of depression or withdrawal appear, working with facility staff or a counselor can help address emotional barriers.

Work with an Elder Law Attorney to Help Make the Transition to Assisted Living

Preparing a loved one for the transition to assisted living can be a challenging process. However, it can lead to a positive outcome. If you’re preparing to move a loved one to assisted living and need guidance on how to best navigate the transition, contact our law firm today to create a plan that respects your loved one’s needs.

Key Takeaways

  • Recognizing the right time for assisted living is crucial: Declining health, safety concerns, or caregiver burnout often signal that a move is necessary.
  • Choosing the best facility requires thorough research: Evaluating medical care, social opportunities and staff quality helps ensure a good fit.
  • Preparing for the move involves emotional and logistical planning: Downsizing, handling financial matters and bringing familiar belongings can help ease the transition.
  • Emotional support is essential for a successful adjustment: Open discussions, family involvement and participation in activities help seniors feel comfortable in their new environment.
  • Legal and financial preparation prevents complications: Reviewing contracts, arranging for medical care and ensuring that estate plans are in order safeguard the transition.

Reference: Elder Law Answers (March 6th, 2025) “Before You Move Your Parents to an Assisted Living Facility”

How Does a No-Contest Clause Protect Your Will?

In a perfect world, you create your will with the guidance of an experienced estate planning attorney, your heirs inherit their legacy and everyone lives happily ever after. In the real world, however, it doesn’t always work out that way. Every year, families scrap over inheritances, says a recent article from Market Watch, “Avoid drama with your will by adding this to your estate plan.”

What can you do? Consult with your estate planning attorney about the possibility of including a no-contest clause in your estate plan. This can deter heirs from challenging your will by creating a no-win situation if they challenge the will in court. When a no-contest clause is included in the will, the beneficiary risks losing their entire inheritance.

The goal is to avoid challenges resulting from an emotional response to grief, which is not unusual, or a long-standing family resentment emerging after the death of a parent. People who are quick to pursue litigation will think twice with a no-contest clause.

Is it possible your heirs might challenge your will? Even if the likelihood is low, it’s worth adding the clause. Estate litigation is lengthy, expensive and emotionally draining. Second marriages, economic disparities among siblings, or estranged offspring provide fertile grounds for will challenges. However, even happy families sometimes find themselves in court battles when large inheritances are at stake.

Another factor: seniors who live longer than expected may have heirs who thought they were receiving a substantial inheritance. When there’s a smaller inheritance, the surprise can lead to litigation. Unfortunately, the cost of estate litigation can significantly reduce the value of an inheritance, making it even smaller.

Warren Buffett’s advice to talk about your estate plan with your adult children is a straightforward and sound approach for most families. Offspring taken by surprise in a time of emotional turmoil are more likely to become contentious.

You don’t have to reveal every detail to your heirs. Howwever, you can educate them about the contents of the will and the estate in general. Letting them know about the no-contest cause and your reasons for adding it may preempt strong reactions if they don’t learn about it until after you’ve passed, and they can’t get answers to their questions.

If the family is a blended one, someone is going to be left out entirely, or there are nuances, such as one person inheriting outright while another receives distribution through a trust over time, there’s the possibility of a challenge. If you plan to give assets to someone who isn’t a family member, like a charity or a close friend, the family may unite to challenge the will.

A no-contest clause isn’t a guarantee there won’t be a challenge after you’ve died. However, it’s a simple thing to insert into your will and reduces the risk. Consult with your estate planning attorney about whether your state allows them—Florida does not—and explore other strategies to minimize estate litigation.

Reference: Market Watch (March 14, 2026) “Avoid drama with your will by adding this to your estate plan”

Protect Your Parents’ Savings From Nursing Home Expenses

As parents age, the possibility of needing long-term care becomes a genuine concern. Nursing home expenses can exceed $100,000 per year, making it easy for a lifetime of savings to disappear within a few short years. Many families assume Medicare will cover these costs. However, Medicare only pays for short-term skilled nursing care, not long-term stays.

To protect your parents’ financial future, proactive planning is essential. With the right legal and financial strategies, it’s possible to preserve assets while ensuring quality care.

Understanding the Risk of Nursing Home Costs

Most seniors will need some form of long-term care, whether through in-home assistance, assisted living, or a nursing home. Unfortunately, many families wait until a crisis occurs before considering how to pay for care, leading to last-minute decisions that can be financially devastating.

Without planning, families may be forced to:

  • Sell assets or liquidate savings to cover care costs
  • Drain retirement funds, leaving a healthy spouse with limited income
  • Lose their home if proper legal protections aren’t in place

Medicaid is the primary payer for long-term nursing home care. However, strict asset limits can make it difficult to qualify without careful preparation.

Legal Strategies to Protect Assets

1. Medicaid Planning and Asset Protection

Medicaid requires individuals to spend down their assets before qualifying. However, strategic asset planning can help preserve wealth. Key Medicaid planning techniques may include:

  • Medicaid Asset Protection Trusts (MAPTs) – Transferring assets into a trust can shield them from Medicaid’s asset count, but this must be done at least five years before applying to avoid penalties.
  • Spousal Protections – If only one spouse needs care, the community spouse (the one staying at home) can retain a portion of the couple’s assets without affecting Medicaid eligibility.
  • Exempt Assets – Certain assets, such as a primary residence (up to a state-set value), are excluded from Medicaid’s limits. However, planning is necessary to ensure proper protection.

Without a clear Medicaid strategy, families may unknowingly deplete their assets before qualifying for benefits.

2. Long-Term Care Insurance

For those who plan early, long-term care insurance can provide financial relief by covering nursing home and assisted living costs. However, premiums increase with age, making it critical to explore policies before health issues arise. Some hybrid policies combine life insurance with long-term care benefits, offering a more flexible financial tool.

3. Gifting and Transfers

Some families consider gifting assets to children to reduce countable wealth for Medicaid. However, Medicaid enforces a five-year look-back period on asset transfers. If assets are given away during this time, Medicaid will impose a penalty period, delaying benefits.

Instead of outright gifts, placing funds into an irrevocable trust or making structured transfers can help protect assets while maintaining Medicaid eligibility.

Steps to Take Now to Protect Your Parents’ Savings

Waiting until a health crisis occurs limits options for preserving assets. Families should take these steps as early as possible:

  1. Assess current assets and long-term care needs – Understanding financial resources and care preferences allows for early intervention.
  2. Meet with an elder law attorney – Legal professionals can help create Medicaid-compliant trusts and asset protection plans.
  3. Discuss long-term care options – Exploring in-home care, assisted living, or nursing home facilities ensures informed decision-making.
  4. Review estate planning documents – Wills, powers of attorney and healthcare directives should align with long-term care goals.

Proactive planning provides financial security and peace of mind, ensuring that parents receive quality care without jeopardizing their savings.

Key Takeaways

  • Nursing home costs deplete savings quickly: Without planning, families may be forced to sell assets or exhaust retirement funds to pay for care.
  • Medicaid has strict asset limits: Failing to plan may result in losing wealth before qualifying for benefits.
  • Asset protection strategies can preserve savings: Medicaid Asset Protection Trusts and exempt asset planning help safeguard wealth.
  • Long-term care insurance offers financial relief: Early enrollment in a policy can help offset nursing home costs.
  • Early planning provides better options: Starting the conversation now prevents financial hardship and ensures better care choices.

Reference: Elder Law Answers (Jan. 16th, 2025) “Protecting Your Parents’ Assets from Nursing Home Costs”

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