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Strategies to Safeguard Assets for Spouses When Facing Long-Term Care

Posted by Susan A. Katzen | Feb 22, 2023 | 0 Comments

You worked hard to provide for your spouse throughout your marriage, and you want to continue to do so well into your retirement years. When the need for nursing home care or assisted living is on the horizon, the cost of such care can weigh heavily. The good news is that asset protection planning can help alleviate this anxiety before it fully sets in.

Asset protection planning allows you to protect your hard-earned resources from being quickly depleted by the high cost of long-term care. The ultimate goal is to be eligible for benefits like Medicaid when the need arises, especially if you have not saved for long-term care and do not have long-term care insurance. If you intend to look to Medicaid to cover the costs of long-term care, early planning is critical because it is only effective if appropriate transfers of assets and property are made three to five years in advance of the application for Medicaid. If the transfers are made in a timely fashion, you can avoid any periods of ineligibility.

While an experienced Newport Beach asset protection attorney can tailor your planning to your specific needs, there are some general strategies to consider:

Asset Protection Trusts

An asset protection trust is an irrevocable trust. An irrevocable trust cannot be revoked, amended, or terminated by you alone, but this can be done with the consent of the trust beneficiaries. Your home, bank accounts, and investments can typically be held in this type of trust. While you cannot access the principal of the trust, the trust can be constructed so that you retain the right to receive dividends and interest. Medicaid cannot access the assets in this irrevocable trust once five years have passed, which makes the need for early asset protection planning imperative.

Income Trusts

Qualified Income Trusts and Pooled Income Trusts can be utilized, so you are not disqualified by the Medicaid income limitations. An individual's income over the Medicaid limits is considered “excess” and must be addressed to ensure Medicaid eligibility.

Qualified Income Trusts or “Miller Trusts” can hold the excess income, so you can meet the Medicaid income limitations. Your asset protection attorney can advise whether or not your state will allow you to spend down the excess income to meet Medicaid limits.

Pooled Income Trusts are used exclusively for disabled individuals. Excess income is pooled together and managed by a non-profit organization. The non-profit organization acts as a trustee and administers the trust for the benefit of those individuals for whom the trust was created. Any unused funds are allocated for use by the non-profit organization.

Medicaid Complaint Annuities

If you did not initiate asset protection planning far enough in advance of needing long-term care, and you are still holding significant assets or made recent transfers, a properly structured annuity can be used during a shortened Medicaid penalty period. Your attorney can assist you in trying to preserve your assets while trying to help you qualify for Medicaid. They can advise you as to how much to transfer, so the Medicaid penalty period is not as long.

Getting Help

Contact our Newport Beach asset protection attorneys today to discuss all your planning options before the need for long-term care arises, so you will have a greater chance of securing benefits and safeguarding your family's financial future. Simply contact our office at 714-374-2244 to schedule a consultation.

About the Author

Susan A. Katzen

"I firmly believe our clients should be treated the way I would want my own family members to be treated. As a result, not only have I put together a compassionate and highly skilled team of people, but together we have served families from the grandparents down to the grandchildren. My staff and...

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