Medicaid Crisis Planning And The Protections It Can Offer
- How crisis planning and long-term care interact
- How assets can be protected in a crisis planning situation
- Why an uncooperative parent may derail the process
Crisis planning is very complex, but potentially very rewarding to families who think that they will lose absolutely everything to the cost of long-term care, which right now, is running somewhere in between $9000 and $15000 per month. So, crisis planning with rules that are provided by Medicaid will allow us, in many cases, to save almost all of the assets for a married couple, and for an unmarried person, Crisis Medicaid Planning oftentimes allows us to save upwards of 50%, 60%, 70% of remaining assets. Often, our families aren’t really worried about saving their inheritance, so to speak. They are mostly concerned about making sure the parents get first class care. Still, if they can blend the crisis planning asset protection feature with making sure parents get perfect care, the best they can possibly afford, that’s a great plan, and frequently, the results we achieve or attempt to achieve when we do crisis planning.
The Medicaid Planning That Can Or Should Be Done For An Unmarried Or Widowed Parent
The need to get down below the numbers that Medicaid prescribes to qualify for Medicaid is the trick here. For folks that have modest estates, there is the technique called half a loaf that could be used if we are in a crisis. Still, if we have time and we can deal with the five-year look back, we can do planning with gifting, and with the use of Medicaid friendly annuity. Perhaps about 50% to 75% of remaining assets or perhaps even more can be saved. The technique requires the use of perhaps a trust or gifting, making sure that we have a power of attorney that allows for that. So, long story short, there are many options available and opportunities and each case has to be evaluated on its own merits.
What May Be Done To Protect A Parents Assets If They Are Already In A Nursing Home
Generally, a lot depends upon how many assets the parent has. If the parent has $2 million worth of assets, then the legal efforts necessary to protect that kind of money would probably be unnecessary. We consider folks with large estates to be self-insured. Still, let’s take an individual, let’s say a Mom who has a home and maybe $150,000 in the bank. Often, the home gets sold, liquidated, and turned into cash. Then the $300,000 that’s realized from the sale of the home, together with the $150,000 in savings adds up to say, $450,000. Then we can do the half a loaf plan. A half a loaf plan involves the use of a Medicaid friendly annuity and a gifting program, and there is a period of eligibility connected with gifting assets away and the annuity that is purchased would pay the cost of care for that period of ineligibility which might be, let’s say 28 months.
At the end of 28 months, if we’ve given away about half of the $450,000 which is about $225,000, we save that for the family. We purchase the annuity for that other $225,000 and that then goes to pay the care for the penalty period. At the end of the penalty period, we’ve saved approximately half of the total amount rather than have the whole amount go to pay for long term care and therefore leave nothing as an inheritance. Most of my clients and most of my parents are really interested in leaving something for their kids. Some, I suppose are reluctant and couldn’t care less, but for the most part, I think everybody that I work with is keen on making sure they leave an inheritance. This is a terrific way to try to preserve that inheritance and still get great care for Mom or Dad.
Possible Alternative Options If Someone Can’t Or Won’t Sign A Power Of Attorney Document
Signing any legal document is a voluntary act. If a parent is unwilling to sign a power of attorney and has all their marbles intact, so to speak, there is nothing much the family can do. If the parent isn’t willing to look to the future and see the potential need for someone else to make decisions for them, so be it. Rarely do I run into that. Sometimes when an individual is far down the line when it comes to cognitive impairment, they can’t sign a power of attorney, so it may be necessary for the courts to get into the middle of the scenario and create what’s called a guardianship and a conservatorship.
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