Nirenstein, Horowitz & Associates trusts
Safeguarding Your Legacy Through Asset Protection
When people hear about asset protection trusts, they often think of shielding wealth from lawsuits. While there are trusts designed for that purpose, today we’ll discuss another type of protection—guarding your assets from the high costs associated with long-term care.
Why Protecting Your Assets Matters
While anyone could potentially face a lawsuit, not everyone is at high risk. However, even if legal action isn’t something you worry about, you should still consider asset protection trusts—especially to shield your estate from the financial impact of long-term care.
You might assume Medicare will cover your future healthcare needs once you turn 65. Unfortunately, Medicare does not cover long-term care, which is one of the biggest expenses many seniors face. Given that the vast majority of older adults will need help with daily activities at some point, this gap in coverage is a significant issue.
In Connecticut, the cost of long-term care is even higher than the national average. While a private nursing home room costs over $116,796 per year across the U.S., in Hartford, it can exceed $182,040 annually.
Medicaid Planning
Medicaid can provide an answer for those worried about the financial burden of nursing home care. While Medicaid is typically associated with individuals of limited financial means, careful planning can allow many to qualify even if they were not initially eligible.
There are two ways to approach Medicaid eligibility:
- Spending down your assets until you meet the financial criteria for Medicaid.
- Proactively planning to protect your assets so that you can qualify without depleting your savings.
The second approach—planning ahead—allows you to preserve your assets, ensuring you can pass them down to loved ones while still being eligible for Medicaid when the need arises.
Connecticut Medicaid Eligibility
For 2024, the asset limit for an individual applying for Medicaid in Connecticut is $1,600. However, certain assets are exempt from this calculation, such as:
- Your primary residence (with an equity limit of $1,033,000 in Connecticut)
- Personal property like household items, heirloom jewelry, and rings
- One vehicle used for transportation
- Unlimited term life insurance
Additionally, if you’re married and your spouse can live independently, they are entitled to retain a portion of the couple’s assets under the Community Spouse Resource Allowance (CSRA). In 2024, this amount can be as high as $148,620.
Using Medicaid Asset Protection Trusts
One of the most effective ways to protect assets that would normally be considered countable for Medicaid is by placing them in a Medicaid Asset Protection Trust. These irrevocable trusts transfer ownership of the assets, making them inaccessible to you but excluded from Medicaid’s asset limits.
While you won’t have direct access to the trust’s assets, you can still benefit from the income they generate. Once you pass away, your chosen beneficiaries will inherit what remains in the trust. However, to avoid penalties, you’ll need to establish and fund the trust at least five years before you apply for Medicaid.
Contact Our Firm
Medicaid asset protection trusts are powerful tools for preserving your legacy and ensuring your family’s future financial security. To learn more about how you can safeguard your assets from long-term care costs, contact us today by sending a message through our contact page or calling us at (860) 548-1000 to schedule a consultation.
