Hank is 72 and Ellen is 69. Retired for several years, they have started traveling a few times a year to visit their children and grandchildren in neighboring states. During one of these visits, their oldest child asked what would happen if one of them suddenly became sick. Hank and Ellen had not thought much about it since they were both in good health, but they decided to schedule an appointment with an elder law attorney when they returned home. Hank and Ellen have lived in and owned the same home since they married 45 years ago. Their checking, savings, and CD accounts total $325,000. They worked hard all of their lives, watched their expenses, and lived frugally without making any extravagant purchases. They want to make sure that they are both protected should they need long-term care, and they want to be able to pass on some of their hard-earned assets to their children and grandchildren.
When Hank and Ellen met with their elder law attorney, they knew they would need to update their Willand powers of attorney. However, they were surprised to learn that they could actually plan now to avoid running out of money in the future should they need long-term care either at home or in a facility. With the help of their elder law attorney, they were able to place $200,000 and their home into a Medicaid asset protection Trust, which named their children as beneficiaries of the trust.
In the event that Hank and Ellen needed additional funds to pay for long-term care or an emergency, their children would be able to take a distribution from the irrevocable trust rather than using their own money for Hank and Ellen's needs. Hank and Ellen decided to put the remaining $125,000 in a revocable trust that they would use for their living and travel expenses. Ellen would also apply for a long-term care insurance policy to provide further protection for them should her health fail (Hank had previously applied but was denied). Should either of them need long-term care and Medicaid benefits, the $200,000 in the irrevocable trust would not be counted against them after the five-year Medicaid penalty period passed.
Unfortunately, six years later, Hank had a severe stroke. Ellen tried to care for him at home but was simply not able to do so. Ellen went back to the elder law attorney for help. Because she and Hank had planned ahead and set up an irrevocable trust, Ellen was able to keep all of the remaining cash assets in their revocable trust, and Hank was able to qualify immediately for state Medicaid benefits. The irrevocable trust, which had now grown to $215,000, remained in place but did not count against Hank since more than five years had passed. Ellen breathed a big sigh of relief, knowing that she did not have to worry about paying for Hank's care and could instead focus on visiting him and supporting him. As illustrated by the situations of Bill and Sally, as well as Hank and Ellen, it is important for seniors and their loved ones to plan early for the possibility of needing long-term care. There are not only financial benefits to doing so, but also numerous non-financial benefits, including reduced stress on the family and peace of mind knowing that the family's needs are taken care of regardless of any health care crisis that may occur. Schedule an appointment with an experienced elder law attorney today to plan for your future.