As estate planning lawyers, we help people facilitate effective postmortem asset transfers, but there is another financial element. You have to preserve your wealth to protect your legacy, and there is a looming threat to it in the form of long-term care costs.
Aging and Living Assistance
It is easy to think that statistics do not apply to you personally, but many people that make up the statistics felt the same way. This definitely applies to living assistance when you are a senior citizen.
You may not envision the need for help with your activities of daily living, but 70 percent of seniors will need this type of assistance. Over half of them will incur long-term care expenses, and Medicare does not pay for custodial care.
To fully wrap your head around this reality, you should digest a simple fact about longevity. Your life expectancy goes up as you get older, and once you reach the age of 67, it is 85 years for a man, and 87 years for a woman.
When you consider the fact that you will probably live into your mid-to-late 80s if you are around long enough to collect Social Security, you can see why long-term care costs are relevant.
Nursing Home Costs
The state of Connecticut has determined that the average charge for a month in a nursing home in our state is $13,863. More than half of people that need paid long-term care will need the assistance for more than a year, and 13 percent accumulate expenses for more than five years.
This is a lot of money to come up with when you have been retired for a couple of decades, and a married couple could be saddled with two different piles of nursing home bills. Clearly, long-term care expenses can be devastating if you are unprepared for them.
Nursing Home Asset Protection
All the above sound like a lot of gloom and doom, but there is a light at the end of the tunnel. Medicaid will cover long-term care costs, but there is a $1600 asset limit in Connecticut because it is a need-based program.
There is also a Medicaid Home and Community Based Services Waiver that will pay for in-home care that is provided by a professional health aide.
If you are married and you are going to apply for Medicaid, your spouse would be able to keep half of the assets. This is called the Community Spouse Resource Allowance (CSRA), but there is a limit of $137,400 in 2022. There is also a $27,480 minimum CSRA.
The healthy spouse can also receive a Monthly Maintenance Needs Allowance. This gives them the ability to utilize income that is due to their spouse, and there is a $3435 limit this year. The minimum monthly benefit is $2177.50.
Home Ownership
A home is not a countable asset for Medicaid eligibility purposes with a $955,000 asset limit in Connecticut in 2022. This may sound like a big break, but there is a Medicaid estate recovery mandate. The program can put a lien on the home if it is your personal property at the time of your death.
Medicaid Trust
The key to an effective plan for aging will often be the utilization of a Medicaid trust. You can convey your home and income-producing assets into the trust at least five years before you think that you may need long-term care.
This advance planning is important, because there is a five-year look back period. You are ineligible for five years after you transfer assets out of your name.
You could receive income from the earnings that are produced by the assets in the trust, but you would no longer be able to reach the principal. If five years pass before you apply for Medicaid, the assets in the trust would not count, your home would be protected.
Attend a Complimentary Seminar!
We conduct seminars at comfortable locations to pass along important information about nursing home asset protection and estate planning. These events are complimentary, so this is a great opportunity to make a connection with our firm.
You can see the dates obtain more information if you visit this page: Complimentary Connecticut Estate Planning Seminars.
Mr. McCann is licensed to practice before the courts of the State of Connecticut. He is a member of the American Academy of Estate Planning Attorneys.
Mr. McCann provides to his clients, trust and estate planning, and trust and estate administration services. Formerly, Mr. McCann was an adjunct professor of economics in the State of Connecticut Community College system, and a Commissioner of the Town of Simsbury Zoning Board of Appeals.