Ways to Protect Your Assets When Moving into a Nursing Home

Ways to Protect Your Assets When Moving into a Nursing Home

Most older people would rather leave their assets to family members rather than have their hard-earned savings go to pay for nursing home care. The bad news is that the federal government and nursing home administrators determine the cost of care based on personal assets. The good news is that people who need to move into a nursing home can do several things to restructure their assets and keep more of their own money. We explore three possibilities in this blog.

Create a Life Estate

If you or a loved one plans to apply for Medicaid to help finance the cost of nursing home care, you should be aware that the program has a five-year lookback period. The purpose of the lookback period is to prevent people from giving away or selling assets so they can meet eligibility requirements. Establishing a life estate is a possible workaround for dealing with the look-back period.

The term life estate means that a person retains ownership of their home until they die. This is true even if their death takes place in a nursing home. The person who takes out a life estate policy names another person as the one who will inherit the property after death occurs.

A life estate is different than a joint tenancy because the named person has an interest in the property while the policyholder is still living. This strategy divides the real estate assets when it comes time to apply for financial assistance for nursing home care.

Consider Long-Term Care Insurance

Long-term care insurance provides reimbursement for some costs of care in a nursing home, rehabilitation center, adult daycare center, or assisted living facility. The person utilizing these services must require substantial help with the activities of daily living. Common examples include grooming tasks and the ability to feed themselves.

Some people hesitate to purchase long-term care insurance because the cost has gone up dramatically in recent years. Others do not want to invest in it because the policy offers no cash value if not used. This is obviously a personal decision that requires consideration of the pros and cons. However, these statistics from the American Association for Long-Term Care Insurance can help:

  • 30 percent of nursing home residents reside for one to three years
  • 12 percent reside for three to five years
  • 12 percent reside for more than five years

Open an Irrevocable Trust

The term irrevocable trust refers to a legal entity that holds a person’s assets in a trust account and designates one or more beneficiaries to receive them. The person holding the trust cannot cancel it or make changes except under specific circumstances. Since the account holder no longer owns the assets, they do not count towards the asset total when it comes time to determining financial eligibility for nursing home care.

Get Help From Professionals

Helping people protect their assets when moving into a nursing home is just one of many legal services we offer at our elder and disability law firm. Please contact Beasley & Ferber to request a consultation to learn more about how we can help.