I have a question we want to preserve our money and will it to our son . Now a friend of ours has explained if we need to go to a long term health care institution we would have to give up tons of money . Is there an insurance or a way to set up a trust to protect a home and a little money from this type of situation . It just doesn't seem fair they go back 5 years .
Long Term Health Care
- Thread starter Breedlove
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Senator
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You can get LTC insurance, which helps, sort of. Or just give as much to your son now, $14K annually is legal. And another $14K each to his spouse and each kid. Sign over your house, and hope you make it another five years. Of course, if he gets a divorce after you give things away, you may lose it too.
Or just start partying like a rock star.
I plan on strippers and lap dances every night if I ever go in for the duration. AFAIK, there is no law against spending it down, even after you get permanently put into a LTC facility.
travelover
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This has been discussed many times before and a search will help you find the old threads.
Basically, you want us to pay for your nursing home so your kid can get a big inheritance?
Basically, you want us to pay for your nursing home so your kid can get a big inheritance?
marko
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Basically, you want us to pay for your nursing home so your kid can get a big inheritance?
SOP in Massachusetts. Lawyers specializing in "elder law" advertise on radio and TV. 70% of LTC is paid by the state in Mass.
Senator
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This has been discussed many times before and a search will help you find the old threads.
Basically, you want us to pay for your nursing home so your kid can get a big inheritance?
There are many programs that we all talk about here, and support, that are essentially the same. I am not sure if this adds to the discussion.
The OP was asking how to legally protect their assets. Taking advantage of the ACA subsidies, moving income from one year to the next, taking advantage of Roth conversions, qualified vs. non-qualified dividends, are all basically the same as any LTC asset protection strategy.
In some states you can set up a Life Estate Deed. Basically you get to live in the house until death then it transfers to the named person automatically. This avoids Probate and thus avoids claims against the house. The downside is that it can't be revoked and you are basically giving your title away while alive.
The OP could give more than 14k/person/person. This just requires filing a gift tax return and initially only eats at the unified exclusion. Beyond that an actual tax would need to be paid. Same goes for signing the house over... and no you can't sell it for a penny unless it is an "arms length" transaction.
And these still require the 5 year look back. If you kids squandered the gift, they could be required to pay back the $ for LTC.
Most trusts that I know of have the 5 year look back. I did go to one talk where a lawyer noted there are some ways around it in specific cases.
There is a way to increase $ for a community spouse that can save some for a beneficiary, a medicaid compliant annuity. A large chunk of the assets as you get ready to go into LTC can be paid for a medicaid compliant annuity that pays out over the projected life of the community spouse. The final beneficiary of the annuity is medicaid. The longer the community spouse lives, the more $ are coming back into the family that could be gifted. I think medicaid may be limited to recovery from the annuity only to the amount paid in.
One think to remember if you go the medicaid route, you may not have a choice of where you go. This could even mean changes from one facility to another... possibly away from loved ones.
LTC insurance. Too much to say on this. Look at older threads. Go get a couple quotes on it. Better yet... get proposals and see if they will give you a hint if you are eligible. Being turned down for a policy can effect your insurability. I chose not to use LTCI, but save/invest extra to buffer some of the LTC costs.
travelover
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My issue is with the premise that our long term care responsibility is somehow not owned by us and that inheritance desires takes precedence over one's own responsibility to fund care until death.
From the OP:
I don't know much about this, but I would assume that this is still under the arms length and 5 year look back rules. Do you know otherwise?
There are Medicaid friendly annuities but I have no experience with them. An Elder Law attorney should be consulted before making any decisions.
Annuities and Medicaid Planning | ElderLawAnswers
Caution before buying a Medicaid Annuity: Read This Before You Buy an Annuity
Annuities and Medicaid Planning | ElderLawAnswers
Caution before buying a Medicaid Annuity: Read This Before You Buy an Annuity
+1
Breedlove
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Yep , I have a plan , we are headed to Amsterdam to spend our life when the time comes . They have Euthenasia . Hell with over paying for a longer life with high price care . It is probably over rated . Ride a little scooter visit the Red light district several times a week , hang out at the coffee shops . As the senator said party like a Rock Star .
Senator
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Isn't that what any subsidy does, including any the ACA subsidy? They conserve assets for a later day, possibly inheritance.
The ACA does it with short term care. I do not see how avoiding LTC costs by avoiding work altogether, spending on what I would consider frivolous items throughout ones life, or restructuring ones assets are any different. The end results is someone else pays.
Any legal means necessary to avoid costs is OK by me. That is what the law(s) are designed for. Spend it, give it away, hide it or burn it. I do not buy LTC insurance for a reason. I do not care if someone else has to pay for my LTC. I paid enough in my lifetime already. That's what printing money is for.
To the OPs point, you can also investigate a Medicaid divorce if one of you winds up in a LTC facility, or is much more likely to wind up there. While they are looked at with a jaded eye, there are attorneys that can help.
If you are going to burn up assets in a LTC facility, you can burn up assets in home care instead. Once the assets are depleted, the LTC facility can take over. It may make for a few better month's at home.
If one is a Veteran, there are assistance programs to help with the LTC costs. My father received an additional per-diem of ~$1300 a month, with COLA while he was in. Plus Vets can get into a Veteran care facility.
Do not forget that any other assistance programs may be available to help cover the interim, especially if you get a divorce and it is a single person with limited assets and no income applying.
If you are not married, you may consider getting married if the SS benefits increase. That is in my plan too as it will mean another $600 a month or so for my situation. It's not a lot, but could pay for something.
ivinsfan
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the five year lookback is just part of the rules, and beware of doing something on paper only..I E deeding over your house and continuing to live there and paying all the taxes and utilities out of your checking account. Depending on the state, they consider that a sham transaction and don't care how many years have passed they will not sign off on paying your nursing home bills.
OP is it really about leaving money to your kid or are you bothered by the idea of shelling out money to a nursing home?
I agree with Senator, the rules are place and you can do what you want, but you literally have to give your money away and have no control over what happens to it...
OP is it really about leaving money to your kid or are you bothered by the idea of shelling out money to a nursing home?
I agree with Senator, the rules are place and you can do what you want, but you literally have to give your money away and have no control over what happens to it...
Senator
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You can also maintain a high HELOC/mortage balance and keep the cash in your personal safe. The LTC facility can only attach to the equity of the home.
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But medicaid will only start paying after you have spent down. Hiding your assets and lying about them would likely be fraud. Although this might be a great way to get another place to stay.
If you are not thinking of medicaid, then the LTC facility can just bump you to the street (I would think).
Breedlove
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I want to give something to my son . As I hear the costs of the long term care goes into the hundreds of thousands . I like the Senator's idea party like a Rock Star ...........Amsterdam here we come
ivinsfan
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Technically true I suppose, but this is actual fraud...no if and or buts.
misanman
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Friend of mine owns a nursing home that doesn't accept Medicaid. He encourages families to give him 6 months notice before they run out of funds so he can help the resident find an opening in a home that accepts Medicaid.
Senator
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It is not fraud to keep money in a safe. It is not fraud to do a cash out refinance, open a HELOC, take out a second mortgage, or get a reversible mortgage.
It is also not fraud to gamble it all away, or party like a rock star until it is gone.
Brat
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My next door neighbor moved from Menlo Park, CA to Portland to place her husband, who had dementia, in a nice lower cost facility. It didn't take long for her to build a social life as she is an artist and she got involved in that community. Now she too is having issues, her son and daughter have visited more frequently. I anticipate that they will move her to a care facility in Vancouver, near the daughter, where costs are even lower.
My next door neighbor is by no means poor but as my Mother used to say, the truly wealthy are value oriented and my neighbor has a sharp pencil.
Moving to a community with lower LTC costs should be considered.
My next door neighbor is by no means poor but as my Mother used to say, the truly wealthy are value oriented and my neighbor has a sharp pencil.
Moving to a community with lower LTC costs should be considered.
It is fraud to state that you are impoverished (in order to get medicaid to cover LTC) when you have a safe full of cash.
As a generation caught between we're doing the planning for my MIL and estate planning for our minor kids. MIL is in the spend down stage since she's in a memory care unit. It's a crapshoot if she'll have to move to a medicaid facility or if her assets will last... She's 90... starting to get more frail... but her blood pressure, cholesteral, etc are all still good... she'd be at home if it weren't for the dementia. DH is in charge of her finances (legal guardian). He regularly gets requests from his siblings for access to mom's money... but he declines them since we're presumably in the spend down period. He also gets told to not spend as much on her since said siblings want an inheritance. (I'm pretty disgusted when this happens.) For our kids we hope to leave them an inheritance - but if we spend it down... so be it... They will most likely inherit at minimum our house (which in SoCal is a sizeable asset)... but there are no guarantees.
I understand wanting to leave your children something... Perhaps suggest that they take care of you when you reach the point of needing assistance... that way you never spend down and they get the fat inheritance.
Fortunately, there are some resources to help with that.
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gauss
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Talk to the elder care/medicaid planning attorney, but consider giving son his inheritance sooner rather than later.
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ivinsfan
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Agree on the partying or rock star life style..disagree on the cash...give it away or spend it, but hiding it and claiming poverty is fraud.you might not get caught but it's still fraud when you fill out an asset sheet and don't say that you have cash hidden away.
