Estate Planning Blog Articles

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Single and Over 50? Estate Planning Is a Must

Estate planning might seem like something only families need to worry about. However, it’s just as crucial for single people, especially those over 50. Without a plan, your assets and healthcare decisions could end up in the hands of the state or distant relatives you barely know. Kiplinger makes the case that estate planning is essential for single people’s well-being and control over their assets.

What Happens without an Estate Plan?

If you pass away without an estate plan, the courts will distribute your property according to state laws. The state will look for your next of kin, which could mean your assets end up with distant relatives. If the state can’t find any relatives, it may claim your assets itself.

What’s more worrying is what happens if you’re indisposed. A spouse, parent, or child will normally make your financial and healthcare decisions if you cannot do so. Absent such a person, the state will appoint someone you probably don’t know to be responsible for you.

Choose Someone to Make Your Healthcare Decisions

A healthcare power of attorney is essential for single people. This document allows you to designate someone to make medical decisions on your behalf if you can’t. You can choose a trusted friend or relative who understands your wishes. Combine a healthcare power of attorney with an advanced healthcare directive to lay out your values, wishes and end-of-life care preferences.

Maintain Control of Your Finances

A financial power of attorney designates someone to handle your finances if you cannot do so. This person will pay your bills, manage your accounts and make financial decisions on your behalf. When you recover from an event that leaves you indisposed, you’ll be much better off having had a trustworthy financial power of attorney.

How Do You Plan Your Inheritance?

Creating a will is the foundation of an estate plan. It lets you decide who inherits your property, whether friends, charities, or other organizations. You can even make provisions for your pets and specify who should care for them. By naming an executor you trust, you can rest assured of your wishes going into effect.

The Importance of Trusts

While a will is the basis of an estate plan, trusts are vital to achieve specific goals. A revocable trust can avoid probate, the court process of validating a will and directly fund goals that are important to you.

State Inheritance Taxes

While federal estate taxes may not concern many, state inheritance taxes can be significant. Many states have lower exemption limits and impose taxes on property left to non-family members. Planning for these taxes is crucial to ensure that your beneficiaries receive the intended amount of your estate.

Can You Pre-Arrange Your Funeral?

You have broad leeway to prearrange your funeral in your will. You can specify whether you want to be cremated or buried and even arrange the details with funeral homes or cemeteries. Documenting your wishes ensures they are followed, preventing confusion or conflict among loved ones.

Who Will Take Care Of You?

Decide whether you want to stay at home with the help of in-home care services or move to a nursing home, if necessary. If you choose to stay at home, making accessibility modifications to your home can go a long way toward making single living practical in later life. Good estate planning can also help you reserve funds for these eventualities.

We Provide Estate Planning for Single People

Estate planning for single people over 50 isn’t just about distributing assets but also about securing the quality of life in your later years and protecting your wishes. Don’t leave your future to chance; contact us today to schedule a consultation and start crafting an estate plan tailored to your unique needs.

Key Takeaways:

  • Ensure That Your Wishes Are Respected: Without a plan, the state decides what happens to your assets and healthcare.
  • Designate Decision Makers: A healthcare power of attorney and financial power of attorney ensure that trusted individuals make decisions if you’re incapacitated.
  • Direct Your Inheritance: A will allows you to specify who inherits your property, including friends and charities.
  • Pre-Arrange Your Funeral: Planning your funeral in advance ensures that your wishes are followed and relieves your loved ones of this burden.
  • Prepare for Long-Term Care: Planning for long-term care, including funding and home modifications, is essential for maintaining independence.
  • Protect Yourself in Relationships: Keep finances separate and avoid giving control to new partners too quickly.

Reference: Kiplinger (May 21, 2024) “10 Things You Should Know About Estate Planning for Singles

Why Consider Long-Term Care Insurance?

Planning for the future is essential to protecting your health and well-being. Your medical expenses grow as you age, and you’ll likely have to bear long-term care expenses. These costs can be too steep for many to bear, which is where long-term care insurance (LTCI) comes into play.

What Is Long-Term Care Insurance?

Long-term care insurance is coverage that helps pay for the cost of long-term care services, such as in-home care, assisted living, memory care and nursing home stays.

As we age, most people eventually need assistance with daily activities, like bathing or dressing. When we reach this point, long-term care is vital to maintaining our well-being and quality of life. However, federal health insurance programs often fall short, and then you have to pay from your savings. According to the National Council on Aging (NCOA), LTCI is invaluable to cover the costs of long-term care.

Why Is Long-Term Care Insurance Important?

As we age, the likelihood of needing assistance with daily activities increases. Whether you stay home or move into a care facility, the costs can add up quickly. Long-term care insurance helps cover these expenses, ensuring that you receive the necessary care without depleting your savings.

What Does Long-Term Care Insurance Cover?

Depending on your policy, long-term care insurance can cover various services, including:

  • Personal care
  • Adult day service centers
  • Assisted living facilities
  • Memory care facilities
  • Nursing homes
  • Respite care

These services ensure that you can maintain a good quality of life, even when you need day-to-day help.

How Do You Get Long-Term Care Insurance Benefits?

To receive benefits from your long-term care insurance, you need to file a claim with your insurance company. A nurse or social worker then evaluates your cognitive abilities and ability to perform daily activities. If you meet the criteria, your insurance company will approve a care plan and begin paying benefits after an elimination period. This period typically ranges from one to three months.

When Should You Get Long-Term Care Insurance?

It’s recommended that you purchase long-term care insurance between the ages of 50 and 65. The earlier you buy, the lower your premiums will be and the better your chances of qualifying for a policy. Waiting too long or having existing health issues may result in higher premiums or denial of coverage.

How Much Does Long-Term Care Insurance Cost?

The cost of long-term care insurance varies depending on several factors, including age, health, gender, marital status and the level of coverage.

For example, a healthy 55-year-old man might pay around $900 annually for a $165,000 policy. On the other hand, a healthy 55-year-old woman could pay about $1,500 for the same coverage due to women’s longer life expectancy and higher likelihood of needing long-term care services. These prices are only examples; you’ll need to look into LTCI personally for an accurate quote.

Where Can You Get Long-Term Care Insurance?

There are several options for obtaining long-term care insurance:

  • Insurance Agents and Brokers: Licensed professionals who can help you find and compare policies.
  • Employer Benefits: Some employers offer group long-term care insurance at lower rates.
  • Government Programs: Federal employees can access the Federal Long Term Care Insurance Program.
  • State Partnerships: Some states offer partnership programs with private insurers for additional benefits.
  • Life Insurance Policies: Some life insurance plans include long-term care coverage.

Find Out More about Long-Term Care Insurance

Planning for long-term care is an essential part of your estate planning. Long-term care insurance can protect your savings, ensure quality care and secure your peace of mind.  However, remember that once you need LTCI, it’s already too late.

Enrolling in a long-term care insurance plan sooner rather than later secures the coverage you need. If you’re unsure where to get started, you’re in the right place. Contact our office today to schedule a free consultation and find the right LTCI option for you.

Key Takeaways:

  • Financial Security: Long-term care insurance helps cover the high costs of long-term care services, protecting your savings and assets.
  • Secure Your Peace of Mind: LTCI provides assurance that you and your loved ones will receive necessary care without financial strain.
  • Timely Planning is Essential: Purchasing at a younger age can result in lower premiums and better chances of qualification.
  • Customized Plans: You can tailor your LTCI coverage to fit your individual needs and circumstances.

Reference: National Council on Aging (NCOA) (Apr. 30, 2024) What Is Long-Term Care Insurance?

Long-Term Care Planning and Timing Move to Assisted Living

A recent JAMA Internal Medicine study titled “The Natural History of Disability and Caregiving Before and After Long-Term Care Entry” examined the health and caregiving needs of assisted-living residents. Study results highlighted the median move-in age, the average level of care needed and likely long-term needs. This article expands on the research results to highlight how your assisted-living move-in impacts elder law in your estate planning and the strategies to consider.

How Does Timing Your Move to Assisted Living Influence Long-Term Care Planning?

The study indicates that the mean age for moving into assisted living is 85, and they are less likely to be severely disabled compared to those entering nursing homes. The research identified a critical period of one to two years during which the care needs of assisted living residents could escalate to levels seen in nursing home settings. This progression underscores the importance of upfront discussions and planning regarding long-term care strategies.

Despite relatively good initial health, over half of the new residents had dementia, highlighting the need for comprehensive planning to protect financial and personal well-being in the event of cognitive decline.

Legal Strategies for Assisted Living Planning

As the average entry age into assisted living is around 85, it is crucial to prepare for possible increases in care needs, including issues related to dementia or cognitive decline. Legal and financial strategies to consider with your elder law attorney include:

  • Living Trust: Living trusts are a three-party agreement between the creator, trustee and beneficiary. With well-written terms and instructions, these trusts can protect your assets and funds.
  • Irrevocable Trust: Irrevocable trusts transfer asset ownership to the trust and can help lower your estate’s value.
  • Powers of Attorney (POA): Durable POAs give legal authority to a trusted person to oversee financial and healthcare matters when you are incapacitated.
  • Advance Care Directives: These directives specify your preferences for medical care, including decisions about treatments and care facilities.

Elder law attorneys are vital in navigating the legal complexities associated with transitions to assisted living. They help draft critical documents like living wills and powers of attorney and ensure that your rights are protected throughout the process.

Conclusion

Deciding to move into an assisted living facility is a significant life choice that impacts quality of life and health care in later years. Consulting with elder law professionals helps families devise flexible plans that accommodate changing care needs, ensuring that legal and financial protections are in place for residents as they transition into and within senior living communities.

Key Takeaways:

  • Optimal Timing for Assisted Living: The average age for moving into assisted living is 85, with prior home care averaging 18 hours per week.
  • Evolving Care Needs: Health and independence levels can approach those of nursing home residents within one to two years, indicating possible changes in care needs.
  • Personalized Decision Making: The decision to move into assisted living varies greatly and should be based on individual health, care requirements and personal preferences.
  • Role of Early Long-Term Care Planning: Elder law attorneys are crucial for helping seniors with early long-term care planning that protects individual rights and assets before a move to assisted living is necessary.

Reference: JAMA Internal Medicine (Nov 6, 2023) “The Natural History of Disability and Caregiving Before and After Long-Term Care Entry

How Parents and Adult Children Talk about Money and Aging

If you thought it was hard to talk with your children about sex, try talking with them about money and death. Americans generally steer clear of talking about death and money. Nevertheless, these conversations are necessary, according to a recent article, “Let’s talk about money and death: Why aging parents and their adult children should have ‘the talk,’” from MarketWatch. Sharing information about finances and end-of-life wishes can prevent resentment or stress before a crisis and gives everyone involved peace of mind.

If an estate plan has been created and financial and tax planning accomplished, but the adult children aren’t told a plan exists, there may be general worry over decades as parents age. What will happen when they die? Will the siblings know what to do? Who will be in charge? A family meeting to discuss the plan and the parents’ wishes can address these issues.

This is especially important for members of Generation X (Americans born between 1965 and 1980). This cohort has the most assets, may deal with a significant wealth transfer and often cares for its children and aging parents.

Start by putting together an agenda for the family meeting. Understand that there may need to be more than one meeting, since there is so much ground to cover. Long-term Care planning, the current status of the parent’s living situation and plans for a possible move to a continuing care facility are just the start. Do the parents have an estate plan and documents like a Power of Attorney, Healthcare Proxy, Advanced Care Directive and the like?

Money can be an emotional conversation, especially if there are disparities in the sibling’s financial status. Parents are often extremely reticent to share information about their net worth, sometimes because they don’t want their children to lose incentive to work, and in other situations because they are embarrassed about not having enough money to sustain them through their later elder years.

Having a neutral third party in the meeting, like an estate planning attorney, can be helpful when emotions are running high. Holding a family meeting in a law office may sound formal. However, having a professional on hand who can clarify estate, financial and tax matters may help keep the conversation focused. If the estate planning attorney works with a therapist or geriatric specialist who facilitates family discussions, they may be able to help the family move past the emotions of anticipated grief into productive, concrete planning.

Confronting the realities of mortality and money is difficult even in the best of circumstances. Nevertheless, with the support of skilled professionals, a focus on care and the creation of a no-judgment zone, the family will be able to help each other as they prepare for the future.

Reference: MarketWatch (March 23, 2024) “Let’s talk about money and death: Why aging parents and their adult children should have ‘the talk’”

Estate Planning Strategies to Care for Aging Parents

Our parents are pillars of support along our journey through life, guiding us through the ups and downs with unwavering love and care. As our parents age gracefully, we can choose estate planning strategies that support them along their journey to retirement and beyond. These strategies address long-term care and living arrangements for our parents’ well-being and peace of mind. We explore why caring for aging parents in estate planning is necessary to preserve their dignity, security and legacy.

Comprehensive Estate Planning Strategies to Care for Aging Parents

Modern estate planning goes beyond wealth protection to create a roadmap for the future. It encompasses health care decisions, financial management and a delicate balance between independence and security. Kiplinger’s article, “Estate Planning for Your Aging Parents: A Delicate Balance,” helps us discuss estate planning strategies to care for aging parents. An estate plan with these strategies provides clarity and guidance to loved ones on aging parents’ wishes, while retaining control for aging parents over financial and health-related matters.

Estate Planning for Aging Parents – How to Balance Independence and Care

Balancing a parent’s independence and care as they age is challenging. Declining cognition and physical health increase the need for legally documented healthcare wishes and appointed representatives to manage financial affairs.

Aging adults value autonomy and may be reluctant to relinquish control over their daily lives. Open and honest communication is the key to finding this balance. Conversations should be encouraged about medical wishes and future goals with an aging parent or parents. An estate plan can then be created that honors their decisions.

Consider how a trust can protect a parent’s wealth, with a trustee overseeing their estate’s administration and asset distribution. A will is another vital estate-planning component, naming beneficiaries to simplify the distribution of assets after a parent passes away.

Plan for long-term care and Medicaid. An irrevocable trust can preserve your parents’ assets during Medicaid approval, while income-producing investments supplement their income.

Incapacity Planning to Respect an Aging Parent’s Health Care Preferences

As parents age, their healthcare needs may become more complex, necessitating careful planning for incapacity. Advanced directives and health care proxies empower parents to designate trusted individuals to make medical decisions, ensuring that their preferences for medical treatments and end-of-life care are honored with dignity and respect.

Tax Planning: Minimizing Burdens for Heirs

Tax planning is another central element in a comprehensive estate plan. Aging parents passing their wealth to the next generation look for ways to minimize the tax burden on their beneficiaries. Gifting, establishing trusts and utilizing tax-advantaged accounts can reduce taxes, maximize inheritance and transfer their wealth more efficiently.

Key Takeaways:

  • Aging Parents: We can choose estate planning strategies that support aging parents in their journey to retirement and beyond.
  • Balance Independence and Care: Encourage conversations about medical wishes and future goals with an aging parent or parents. An estate plan can then be created that honors their decisions.
  • Incapacity Planning: Advanced directives and health care proxies empower parents to designate trusted individuals to make medical decisions,
  • Tax Planning: Gifting, establishing trusts and utilizing tax-advantaged accounts can reduce taxes, maximize inheritance and transfer their wealth more efficiently.

Conclusion

Caring for aging parents in estate planning is practical and necessary. It is also a profound expression of love and gratitude. Embracing this responsibility with compassion, empathy and diligence helps our parents navigate this stage of life with dignity, security and peace of mind.

If you’re ready to embark on this estate planning journey for your aging parents, our experienced legal team guides you every step of the way. Contact us today to learn more and confidently start planning.

Reference: Kiplinger (February 2024) Estate Planning for Your Aging Parents: A Delicate Balance.”

How to Protect Your Spouse when Diagnosis Is Dementia

Few illnesses are as terrifying as dementia, for which there is no cure. If estate planning is in place, it may need to be adjusted to address new, more imminent issues. Reviewing the family situation from a legal and financial aspect is critical, and there is no time for delay, explains a recent article from Morningstar, “’I don’t want my wife to lose everything’: I’ve been diagnosed with dementia –I suddenly could not spell or write legibly.”

There are a number of steps to be taken to smooth the path ahead. First is to update your will and create a financial power of attorney. Don’t try to do this without the help of an experienced estate planning attorney.

This may also be the time to reassess your investment portfolio based on your new financial plan and risk tolerance.

An Advanced Healthcare Directive will inform doctors what actions you want them to take when you cannot make those decisions for yourself. You may want to list your wife as your healthcare proxy to carry out these decisions, but be mindful of the pressures put on a marriage when serious healthcare issues occur. Your spouse will need emotional support as well, and you’ll want to have a successor to your spouse for both the healthcare and POA documents.

Share your situation with trusted family and friends to create a team–a community of people who can provide support, part of which will be updating beneficiaries. Now would also be the time to record instructions for access to devices, documents, and even daily habits.

Long-term care insurance will help with expenses and should serve as an example for anyone reading this article. Policies should be purchased early in life when they are relatively affordable to help alleviate the financial burden of nursing home costs.

An estate planning attorney and financial advisor will help you take an accounting for assets, expenses, and projected long-term care costs. You’ll want a team approach to provide as much guidance as possible.

When to put your long-term care policies into payout status is a difficult decision. You’ll need to time this with a Medicaid plan, which your elder law estate planning attorney will be able to help with.

Now may also be the time to create a trust and divest assets to make it through the five-year Medicaid look-back, using your long-term care policy in the next five years.

There are exceptions to the five-year look-back rule for Medicaid eligibility. They include paying off debts, buying medical devices, or making home improvements to improve accessibility. However, eligibility depends upon income and other assets.

Some states, including Florida and New York, have rules exempting homes from assets calculated by Medicaid under certain circumstances. California eliminated an asset limit this year, making a person’s home automatically safe from Medicaid while they are living, but this does not mean it’s exempt from the Medicaid Estate Recovery Program.

Working with a team of professionals, including an estate planning attorney, and having the support of family and trusted friends will be important as time goes by and the disease progresses.

Reference: Morningstar (Feb. 25, 2024) “’I don’t want my wife to lose everything’: I’ve been diagnosed with dementia –I suddenly could not spell or write legibly”

Should I Consider Working with an Elder Law Attorney?

Partnering with an elder law expert is the best way to make life transition easier as seniors age. RC Online’s recent article entitled “Why Is It Ideal for Working with An Elder Law Attorney During Life Transitions?” explains that many people have issues in the stage of life when they’re weak and not feeling well. This can result in health or mobility issues for many family members. The challenges faced by the family can cause financial strain, making lifestyle adjustments difficult, the article says.

Elder law attorneys can help family caregivers understand their loved one’s current situation and provide possible future solutions. This includes planning for situations where a debilitating illness requires long-term care.

Elder law attorneys often see various financial and medical circumstances when representing seniors in court, so their assistance can be extremely valuable when addressing issues, such as managing long-term care needs.

Specialized services for elderly care. Elder law attorneys focused on legal matters concerning older individuals. An elderly law attorney will be familiar with the elder laws of your state and will be able to identify potential conflicts or issues easily. As a result, they’ll be able to take appropriate actions to protect their client’s interests and rights.

Long-term care plan development for seniors. An elder care attorney can provide an objective perspective on the kind of care for their elders. This can help create a longevity plan that meets everyone’s needs.

The attorney will focus on families’ issues and problems as parents or spouses age. They provide legal services to individuals facing aging challenges, such as health care decisions and financial planning. An elder law attorney will consider the required level of care and whether a person can remain in their own home or require long-term nursing care.

Help for families in mediation and education. These are critical parts that play an important role during a family’s transitional phase. Mediation helps families maintain communication, and education provides knowledge for handling various issues.

It is important to have legal agreements related to retirement benefits, assets and who will be responsible for caring for an elderly loved one. An elder law attorney can help make these arrangements to prevent family fights and protect assets. They can assist seniors as well as heirs and beneficiaries to prevent losing assets due to financial problems or other circumstances.

Reference: RC Online (Feb. 14, 2023) “Why Is It Ideal for Working with An Elder Law Attorney During Life Transitions?”

Why Does Government Deny Social Security Disability Benefits

Kiplinger’s recent article entitled “3 Main Reasons Why the Government Denies Social Security Disability Benefits” says three main issues are the primary contributors to the high denial rates and prolonged appeals process:

  1. Applicants fail to satisfy work history requirements. Anyone who pays FICA payroll taxes long enough, is typically insured for SSDI. However, that doesn’t mean they’re eligible for benefits. To meet the SSA definition of disability, one must have physical or mental impairments that prevent them from being unable to perform any substantial gainful activity (SGA) for at least 12 months or have a terminal diagnosis. SGA encompasses work performed for pay or profit, and for 2022, the monthly benefit one would receive after qualification is set at $1,350 a month, or $2,260 if you are blind.
  2. Applicants provide incomplete documentation. Detailed medical evidence is required to document a disability and its impact on the person’s ability to perform SGA—it’s a crucial part of the SSDI application. This should include diagnoses, medical tests and results, treatment history, prescription drugs, surgeries, ER and doctor visits and other relevant medical details to show not just that you have a problem, but also that you’ve been receiving regular medical treatment for your issue. This, along with details about how a disability influences your activities of daily living, is especially significant if you have an invisible disability, such as mental disorders, neurological conditions or cognitive dysfunctions caused by injury or disease. Regular monthly treatments and drug therapies with specialists and mental health professionals are an important part of your claim.
  3. Applicants not knowing they have the right to an SSDI representative. The SSA doesn’t tell initial applicants they have the right to retain a representative to assist them. As a result, most people try to navigate the complicated program on their own. You need an advocate to tell the story of your disability and its impact on you and your family. Less than 30% of applicants have an SSDI representative to help them apply. Those individuals are 23% more likely to get their application approved. It also means getting benefits in six months compared with a year or two!

Representatives are taking on more SSDI cases resulting from long COVID symptoms that have exacerbated physical and mental impairments. Long COVID may affect up to 30% of COVID patients, or an estimated 25 million people in the United States, especially those with respiratory disease, diabetes and cognitive issues.

Reference: Kiplinger (July 16, 2022) “3 Main Reasons Why the Government Denies Social Security Disability Benefits”

Can I Avoid the Economic Dangers of Caregiving?

AARP’s recent article entitled “5 Steps to Avoid Economic Pitfalls of Caregiving” reports that 20% of family caregivers have to take unpaid time off from work due to their caregiving responsibilities.

The average lifetime cost to caregivers in lost wages and reduced pension and Social Security benefits is $304,000 — that is $388,000 in today’s dollars. This does not count the more than $7,200 that most caregivers spend out of pocket each year, on average, on housing, health care and other needs for loved ones in their care, according to the AARP report.

Step 1: Calculate the gap. The average cost of a full-time home health aide is nearly $62,000 a year, and a semiprivate room in a nursing home runs about $95,000. Ask your parents about the size of their nest egg, how fast they are spending it, whether they have long-term care insurance and how much equity they have in their home. Compare your parents’ assets against their projected expenses to determine your gap.

Step 2: Fill the gap without going broke. Try to find free resources: Use the National Council on Aging’s BenefitsCheckUp tool to find federal, state and private benefit programs that apply to your situation. Then create a budget to determine what you can contribute, physically and in dollars, to closing the gap. In addition, ask your siblings if they can pitch in.

Step 3: If a gap remains, consider Medicaid. This program can cover long-term care. However, your parent or parents may need to spend down assets to qualify. Note that if just only one parent is in a nursing home, the other can generally keep half of the assets, up to a total of $137,400 (not including their house). However, the rules differ by state. As a result, this can get complicated. Speak with an elder-law attorney for help.

Step 4: No matter what the gap, try to get paid. If your parents have enough resources, you may discuss having them pay you for caregiving. However, you should speak with an attorney first about drawing up a contract. This should include issues like the number of hours a day you will spend on providing care and whether doing so will require you to quit your job. The caregiving agreement is written carefully, so that it does not violate Medicaid regulations about spending down assets.

Step 5: Protect your own earning ability. If you are mid-career, it is very difficult to leave a job for ​family responsibilities like caregiving and then go back into the workforce at the same salary. The Society for Human Resource Management says that it costs six to nine months’ salary to replace an employee, so many employers now see it is less expensive to make an accommodation.

Reference: AARP (Feb. 24, 2022) “5 Steps to Avoid Economic Pitfalls of Caregiving”

Must I Sell Parent’s Home if They Move to a Nursing Facility?

If a parent is transferring to a nursing home, you may ask if her home must be sold.

It is common in a parent’s later years to have the parent and an adult child on the deed, with a line of credit on the house. As a result, there’s very little equity.

Seniors Matter’s recent article entitled “If my mom moves to a nursing home, does her home need to be sold?” says that if your mother has assets in her name, but not enough resources to pay for an extended nursing home stay, this can add another level of complexity.

If your mother has long-term care insurance or a life insurance policy with a nursing home rider, these can help cover the costs.

However, if your mom will rely on state aid, through Medicaid, she will need to qualify for coverage based on her income and assets.

Medicaid income and asset limits are low—and vary by state. Homes are usually excluded from the asset limits for qualification purposes. That is because most states’ Medicaid programs will not count a nursing home resident’s home as an asset when calculating an applicant’s eligibility for Medicaid, provided the resident intends to return home

However, a home may come into play later on because states eventually attempt to recover their costs of providing care. If a parent stays a year-and-a-half in a nursing home—the typical stay for women— when her home is sold, the state will make a claim for a share of the home’s sales proceeds.

Many seniors use an irrevocable trust to avoid this “asset recovery.”

Trusts can be expensive to create and require the help of an experienced elder law attorney. As a result, in some cases, this may not be an option. If there’s not enough equity left after the sale, some states also pursue other assets, such as bank accounts, to satisfy their nursing home expense claims.

An adult child selling the home right before the parent goes into a nursing home would also not avoid the state trying to recover its costs. This because Medicaid has a look-back period for asset transfers occurring within five years.

There are some exceptions. For example, if an adult child lived with their parent in the house as her caregiver prior to her being placed in a nursing home. However, there are other requirements.

Talk to elder law attorney on the best way to go, based on state law and other specific factors.

Reference: Seniors Matter (Feb. 25, 2022) “If my mom moves to a nursing home, does her home need to be sold?”