While a nursing home can provide necessary assistance in your waning years, it can also be a source of consternation. Eldercare facilities are notorious for sapping their residents’ assets. If you have money you want to share with loved ones after your death, that’s something you want to avoid at all costs.
Fortunately, it isn’t a foregone conclusion that a nursing home will take all of your money. By taking the right steps before entering a senior residence, you can protect your assets from any greedy hands that may be tempted to take them.
Purchase Long-Term Care Insurance
Long-term care insurance is the best means of protecting your assets, but it has several significant downsides. For one thing, it can be rather expensive. It’s still less costly than spending every dime you own on care, but it might be difficult to cover the high premiums unless you’re financially secure.
It’s also possible that you might never use it. This type of insurance only activates if you suffer a condition that makes you incapable of performing daily life activities — you can’t use it to pay for an elder living facility if you aren’t at least partially disabled.
Gift Your Assets to Loved Ones
If your main goal is to ensure that your loved ones receive an inheritance after you pass, you can start gifting that money before you die. Keep in mind, however, that there are tax implications to gifting money, so you’ll want to consult with an estate lawyer before you start giving away your wealth.
The biggest advantage of this option is that any money you gift is protected, meaning you’ll get the satisfaction of seeing what your loved ones do with their early inheritance.
Create a Life Estate
If you estimate it will be at least five years until you need to enter a nursing home, you can transfer your home to the intended inheritors by creating a life estate.
A life estate is a type of contract that transfers ownership of a property to another party while allowing the original owner to continue to live there until they die or otherwise vacate.
The one flaw to this strategy is that you’ll suffer a financial penalty if you enter a nursing home less than five years after creating the life estate. As such, this option is best employed after you’ve retired but long before you believe you’ll need senior care.
Create an Irrevocable Trust
An irrevocable trust functions similarly to a will, except the assets you put in it cease to be yours as soon as it’s enacted. The trust must be run by an independent trustee, and the beneficiaries will receive the assets when you eventually die.
Because you’re no longer the owner of the assets in the trust, Medicaid can’t treat them as part of your resources. For the same reason, your nursing home can’t seize them to pay for services.
Transfer Income to Your Spouse
If you enter a nursing home but your spouse doesn’t, you may be able to shelter some money by transferring it to them.
Your spouse’s income, up to a specified limit set by the state, is protected from seizure under federal law. If they earn less than that limit, you can transfer funds equal to the difference each month.
A Qualified Attorney Can Help Safeguard Your Assets
Before trying to shelter assets, it’s a good idea to talk to an attorney that specializes in real estate and elder planning.
The lawyers at Merlino & Gonzalez in Staten Island, NY, can help you better understand your options for protecting your assets after entering a nursing home. Contact us today to schedule a consultation.