Asset Protection against Medicaid – Advance Planning

Massachusetts Asset Protection Against Medicaid – Advance Planning Attorney

The key to successful Asset Protection is taking action as early as possible. Before reviewing the solutions, it is important to review the facts and solutions:

The Facts That All Seniors (and Their Children) Need To Know:

  • Long term care is a reality for many elders: A Metlife study confirmed that nearly 50% of seniors age 65 and older will require some nursing home care
  • The average stay is longer than you think: The US Government's Centers for Disease Control conducted a national study in 2000 and confirmed that the average long-term nursing home stay was 838 days (nearly two and a half years).
  • Daily nursing home rates exceed a night at the Ritz: Area nursing homes often charge more than $425 a day (more than $13,000 per month and more than $150,000 per year)! And this princely sum buys only a shared room. Each year the price of care increases – often in excess of the rate of inflation.
  • Hoping for the best is too risky: While all seniors hope to stay home, failing to plan for the risk of nursing home care is a very risky gamble. More importantly, you risk losing your nest egg thus impoverishing yourself and your spouse (if you are married)
  • Well off people are not immune to these costs: Even elders with higher net worths must take heed. Assuming the cost of nursing home care increases 5% each year, a five-year stay could cost more than $1 million.
  • Long term care insurance may not be enough: Even if you are among the very few who maintain a long term care insurance policy that can help pay for nursing home costs, few policies pay more than $200 per day. That is far less than the actual $400 plus daily cost of nursing home care.
  • Your health insurance will not foot the bill: Your private health insurance and Medicare will cover only hospitalizations and short term rehab but not long term care.
  • Medicare short term rehab benefits can end quickly: There is a common misconception that Medicare will cover 100 days of rehab in the nursing home. The reality is that the facility evaluates your needs daily or weekly and discharges you from Medicare based upon complex and often-misunderstood criteria. As a result, for most seniors receiving Rehab, Medicare will terminate after only a few weeks and the senior will have to pay the daily private pay rate thereafter (often more than $400 per day!).
  • Medicaid – MassHealth is not easy or automatic: A single individual does not qualify for MassHealth benefits until he or she has less than $2,000 of countable assets. Our government is in financial crisis so the laws are geared toward extracting every penny of your savings to pay for nursing home costs.
  • The Nursing Home may offer to help you get Medicaid "for free": While the nursing home may not charge you a fee to apply for Medicaid, the reality is that the nursing home will have you pay them every last dollar you have to cover your private pay costs until you have less than $2,000. The Nursing Home will not share with you the fully-legal planning strategies that would allow you to preserve and protect assets for your benefit or for a spouse.
  • There is a solution: You are lawfully entitled to work with us to ensure that you and your hard-earned savings and income are protected to the maximize extent permissible under the law. While advance planning is ideal, we are able to achieve tremendous savings to clients in crisis.

The Solutions That All Seniors (and Their Children) Need To Know:

Take advantage of advance planning

  • Timing is of the essence
  • If you are not already in a nursing home, and in relatively good health, then you have a tremendous opportunity to take action today to engage in advance planning.
  • Advance planning often requires planning with a five-year outlook so that you can overcome the Medicaid (MassHealth) five-year look back period. In certain instances, asset protection strategies will trigger the five-year look back period to begin. So undertaking planning today to start that stopwatch means that you will have the peace of mind of knowing that the clock is now in your favor.
  • Expertise is a must
  • Advance planning requires the guidance of an attorney who specializes in the asset protection area of law. Because of the tough economy, many general practice lawyers are now calling themselves "elder law attorneys". But very few of them have the credentials, expertise, and experience required to successfully protect your home and savings. We advise that you carefully review "10 Questions to Help you Locate a Qualified Elder Law Attorney " so that you can ensure you will be protected.
  • Why bother savings assets – the nursing home covers everything doesn't it?
  • By shielding assets and income, we can help ensure that married clients protect their spouse at home and unmarried clients have rainy day funds to supplement their quality of life for the rest of their lives. The fact is that nursing homes do not cover all of the needs of our clients. Our clients in nursing homes enjoy a much higher quality of life than those residents who failed to save assets.
  • Irrevocable Trust Planning
  • One advance planning asset protection strategy is establishing and funding an irrevocable trust.
  • An irrevocable trust creates some distance between you and the asset you place into the irrevocable trust. There are certain powers that you may retain so that you do not give up total control. But it is essential to work with an expert attorney who knows the difference between authorized powers you may retain and excess powers that may cause your irrevocable trust assets to be treated by MassHealth as countable assets.
  • The Dangers of Outright Gifting
  • As a general matter, we strongly discourage outright gifting of your home or savings to your children or loved ones.
  • Some seniors are under the impression that they had better "give it all away" otherwise the government will take it. That is lousy advice for you and your family.
  • The danger of gifting your assets – even to loved ones – is that the assets might not be available to you should you need them in the future. Even if you are 100% certain that your child loves you and would always do the right thing to help you, the unexpected can happen. Please consider the following risks of outright gifting:
  • Risks of Capital Gains Taxes that could have been avoided!: If you gifts assets, including your home, or add a child's name to your deed, your actions may significantly increase Capital Gains Taxes by tens of thousands of dollars.
  • Risks of Divorce: If your child divorces, your in-law will move swiftly to take the home or savings you gifted to your child. And sadly, the divorce judge will ignore your pleas that the money is really yours.
  • Risks of Lawsuit Judgment: If your child gets in a car accident and injures someone, the victim will be more than happy to take the home or savings you gifted to your child. Again, the lawsuit judge will be bound to look out for the victim rather than the fact that you have lost your nest egg.
  • Risks of Creditor Problems or Bankruptcy: If your child or in-law runs into creditor problems or files for bankruptcy, your gift of the home or savings will likely be lost.
  • Risks of Death: If your child dies, the gifted home or savings will pass through that child's probate estate. At that point, it is anyone's guess as to where the gift ends up and whether that recipient will use it for your benefit if you need it.
  • In very limited instances, with the careful reasoned advice of a Qualified Elder Law Attorney, gifting may be a valuable strategy. Most often, such gifting involves careful trust planning.

Your Estate Plan Must Include Critical MassHealth Planning Authority

Many seniors come to us with existing estate plans crafted by well-meaning general practice attorneys (lawyers who dabble in everything from contracts to real estate to divorce and estate planning). It is virtually impossible to dabble in estate planning and elder law and achieve an optimal plan for a client: the law is simply too complex and ever-changing. Our focused expertise is required to ensure that you and your hard-earned assets are protected.

All estate plans are not created equally. You must ensure that your plan will in fact achieve your goals. Imagine the peace of mind of working with our estate planning and elder law specialists. Because our practice is focused exclusively on asset protection, benefits planning, and estate tax protection, we craft estate plans to truly achieve your objectives.

If you attorney is not an expert in this area, how will he or she know what language needs to be in your estate plan to ensure that you are truly protected? The answer, of course, is they won't know. Can you afford to take that risk? Have you confirmed that your past attorney can answer our Qualified Elder Law Attorney questions with a confident YES?

Will Your Power Of Attorney Be Adequate When It Is Needed?

Some clients come to us with an existing Power of Attorney (POA) and assume that their planning is adequate. The POA is often just a few pages long – sometimes printed off the internet. We have a name for these POAs: The Nursing Home Power of Attorney. Why? Because Nursing Homes love these Powers of Attorney because it often means that the senior's home and savings will have to be spent down on Nursing Home costs – rather than preserved and protected.

The fact is that a POA is only as good as the powers specifically contained in it. Massachusetts Courts have held that a general grant of power – for example "all the authority I would have if I were well" – is not sufficient for the appointed agent to engage in the type of Asset Protection and benefits planning that you may need to save your home and savings.

Does your POA contain Gifting authority? Is the gifting authority limited? Self-dealing authority? Trust planning authority? If you are not certain, you need the immediate advice of a Qualified Elder Law Attorney.

If you lose your capacity, you are stuck with your existing POA (if you have one). If the POA is insufficient – or non-existent – then we will need to represent your family and petition the Probate Court to pursue special planning authority, which will cost you many thousands of dollars if the judge even allows it. You can avoid those costs and the risks of the Probate Court – and have peace of mind today – by visiting us for your Estate Planning.

We craft a Power of Attorney with broad authority so that your agent can act on your behalf to implement Medicaid and VA planning strategies and protect your assets and income to the maximum extent permitted by law.

Contact a lawyer at Curley Law Firm LLP today by calling toll-free (866) 406-8582 or contacting us through our Intake Form.