Avoid Eldercare Crisis PlanningPosted on May 11, 2014 by ElderCare Resources in Blog, Caregiver Education, Education, Elder Law, Financial Services, Government Agencies, Long Term Care Information
Better With Age: Avoid elder-care ‘crisis planning’ mode
I recently attended a great gathering of elder-law attorneys from around the state.
One of the most well-attended workshops focused on what is known among elder law attorneys as “crisis planning.” We are called upon to do crisis planning after a panicked phone call that goes something like this:
My mother is in the hospital, and they tell us that she needs to go into a nursing home. She’s done no planning. Can you help us preserve some of her assets?
While all of us strongly advocate for planning in advance, all too often we get that call. Many lawyers I have met with tell me that almost all of their clients are seeking crisis planning.
As an aside, I am pleased to tell you that a fairly large percentage of my clients have heeded the call for advance planning. Nonetheless, the panicked calls come all too frequently.
So what’s the difference?
The only government program that covers long-term care is Medicaid, which looks back five years to see what you have been doing with your money and other assets.
If you start planning when you are healthy and relatively young (which, in my practice, could be up to age 85), you have the luxury of time. Though assets can certainly still be saved even when you are at the nursing home’s door, the potential for preserving your life’s savings for yourself and your family is much greater when time is on your side.
So, what can be done if long-term care and its frighteningly high cost are imminent? The common-sense answer and the legal answer are the same: reduce your assets so you can become eligible for Medicaid.
But how to do this without simply spending every penny you have on the nursing home and impoverishing yourself? That’s where crisis planning comes in. Here are some of the highlights:
1. The legal Medicaid “Spenddown”:
- Buy prepaid funerals for you and your family, commonly known as “burial trusts.” You would be surprised at how many different relatives Medicaid allows.
- Renovate your home. Replace that leaky roof. Buy that new kitchen you always wanted. But remember to look into protecting your home from Medicaid liens on this most valuable possession.
- Retain the services of an experienced elder law attorney. This is not only a Medicaid-allowable expense, it also can help you retain your assets for you and your family.
2. Medicaid-allowable transfers:
Although most gifts to family members within five years of your needing Medicaid will bring about a penalty period, there are some that are freebies. Here are some examples:
- Transferring your home to a caregiver child — a son or daughter who has lived with you for at least two years and helped care for you.
- Transferring any assets to a legally disabled child.
3. The gift/loan strategy.
When you have accomplished all of your legitimate spenddowns and exempt transfers, there is still a way of saving approximately half of what you have left for your family. This is a complex procedure where part is gifted and part is loaned. You get to keep the gift part. It’s a valuable last-minute tool but if calculated wrong you can, in essence, lose it all. So don’t try this one on your own.
These are only a sampling of basic crisis-planning techniques. Whether or not these may work for you depends on your circumstances. They are best utilized as part of a comprehensive plan. Even at the last minute, we can save some of your assets, but it is often only a fraction of what you can retain if you start your planning early.
So do yourself a favor. Do your family a favor. Start early and avoid crisis planning.