Many people will be unable to pay for long term care that they are likely to need as they age. Few families can pay $90,000 a year or more to a nursing home. Fortunately, when you run out of money to pay for nursing home care, the government Medicaid program will usually pay. Since both nursing homes and home care are so expensive, many care recipients eventually run out of money and end up relying on Medicaid benefits. When you die, Medicaid expects to be repaid for the money it spent on your nursing home care. This repayment requirement is enforced through the Medicaid Estate Recovery program. Most people want their home to go to their children or other family members when they die, not the government. Medicaid Estate Recovery can force your home to be sold to pay the government back.
With expert planning, especially if you plan in advance, seniors can ensure that their homes will stay in the family after their death and not be lost to estate recovery. There are a number of different planning options that people can use to protect their homes from the Medicaid Estate Recovery Program. Let us discuss them with you at ElderLawLexington | McClelland & Associates, PLLC.
Using a long-term care trust, your property can be protected from estate recovery when you die, even if you have a long stay in a nursing home. Since your child is not the owner of the property, it is protected from any bad things that may happen in your child’s life as well. A trust allows you to protect your real estate and other assets from long-term care costs while avoiding the risks and negative consequences of outright transfers to children and there are likely tax implications as well. By transferring your home and other assets into a properly designed trust, you can still reserve an interest in the transferred assets, advantages that are not available when transfers are made outright to a child or children.
In elder law estate planning and Medicaid planning, our clients at ElderLawLexington frequently ask us if the nursing home or Medicaid can take the home to pay one’s nursing home bill. Upon the death of a Medicaid recipient, the state may seek repayment of its outlays for the senior’s long-term care. The Medicaid Estate Recovery Program (MERP) recoups this money by filing claims against any assets a Medicaid recipient held an interest in at the time of their death, such as a home. As an example, say a person was in a Medicaid-certified nursing home for two years and the state paid the nursing home $4,000 each month for their care. If the house was still in the person’s name at the time of death, then to repay the state the $90,000, the house would have to be sold. As previously stated, with expert planning, seniors can ensure that their homes will stay in the family after their deaths and not be lost to estate recovery.
The best way to save your house from Medicaid recovery is by putting the house into an irrevocable trust. A trust protects the house because the individual no longer owns the house. The parents can also be protected from the children deciding it’s time for the parents to move out. There are also tax benefits for the children if a trust is used as opposed to an outright gift.
Contact us at ElderLawLexington | McClelland & Associates, PLLC, and let’s discuss the best way to save your house from Medicaid. Call Before The Fall ®