Nursing Home/Long Term Care/Home Care/Protecting assets
I have a 2-part question.
1. My mother is in her 70s and we are trying to protect her assets in case she ever needs Medicaid for long-term care or nursing home care. Her most valuable asset is her house. We are looking at setting up an irrevocable trust and putting her house into it along with some other assets. Since Medicaid has the 60-month "look back" period and the transfer penalties, what difference does it make whether she puts the house into the irrevocable trust or simply gives it to me? If she needs Medicaid within 5 years of doing either, she will be penalized just the same. Is there any advantage/disadvantage to either of those two methods?
2. Some insurance providers offer hybrid insurance policies that include a payoff for long-term care OR a death benefit. My mother owns a property which she will sell, and she doesn't need the cash, so she is thinking about purchasing one of these products. For example, she might put $100k into this product and it will pay $300k in long-term care expenses OR (if the long-term care expenses are not needed) $300k in death benefits. I am just making up the numbers because we haven't confirmed the specific amounts yet. My question is, does such a product make sense for someone her age? I'm sure it depends mainly on what the payout amounts are, but can you offer any general guidance on the pros and cons of this type of product for a person her age?
Good afternoon. I just want to commend you on planning on the cost for long term care for your Mom in advance. I work with so many families who are unprepared for the cost and then their options are greatly limited at the time it is needed. Both of your questions are very good and insightful and also out of my area of expertise. But maybe I can point you in the right direction to the professionals who can give you advice. On your first question. One thing to consider is that Medicaid is designed to pay for long-term care or nursing home care for those who don't have assets. Those who have assets should consider using those assets to pay for what they are using. That being said there are many people who set up trusts and other financial vehicles to move assets prior to the time that long term care is needed as you are describing. I suggest you seek the advice of an elder care attorney (one that specializes in legal issues for Seniors). They will look at the specifics related to your mom's assets and give you the best advice. Usually there is a consultation fee. From the consultation, you can decide if you want that particular attorney to do the legal work of setting up the trusts, etc.
Additionally, you can seek the advice of a CSA (Certified Senior Advisor) in your area. They are educated and certified to work through all areas of future planning for seniors (including financial concerns as you are describing). They can give you pointed, professional advice and it is usually more affordable than an attorney. You can search on the internet for a CSA in your area and that should direct you to their contact information and sometimes their area of expertise.
For your second question, I would consult a number of insurance agents and caution you to move slowly on this one. I work with many families who try to use their Long Term Care Policy or their Universal Life Policy for long term care needs. Many find that there are limitations on the policy that they did not understand or know existed.
While this does not answer your questions directly, I hope this helps you and your Mom in some way. My best to you as you help her to make these important decisions regarding her future.
Please do not hesitate to contact me back if you have any other questions.
With Warm Regards,