How Can an Asset Protection Trust Help Keep You Out of a Nursing Home?

Do you know someone who has spent time in a nursing home? Have you ever thought about going into a nursing home yourself? Most people answer the first question yes and the second question no. It is one of those situations where we feel “It could never happen to me.” But the U.S. Department of Health and Human Services estimates that 70% of people over 65 years of age will need long-term care and 40% of people over 65 years of age will require nursing home care.

Are you one of the many people who would prefer to stay at home no matter what the cost? Without proper planning, the lack of available services and the staggering price-tag may leave you with few alternatives. And long-term care insurance may not be an option for you due to your health or the cost.

In Florida, the median annual cost of care for a private room in a nursing center is $100,375 and $89,297 for a semi-private room according to the Florida Health Care Association, and it is climbing each year!

If you choose to stay at home, where most of us would prefer to be, and hire home health aides, the cost of your care could be even more. Home health care costs vary widely, but agencies charge $25 on average per hour for home health aides. In some cases, people pay over $165,000 per year for 24 hour-a-day home care.

Contrary to the belief of many seniors, you usually cannot rely on Medicare for payment of long-term care costs, whether at home, in assisted living or in a nursing facility. Most Americans cannot pay their own way for long-term care. So, what can you do?

When long-term care insurance is not an option, and personal income and resources are not sufficient to pay for your care, one planning technique is to transfer assets into an “Asset Protection Trust”, retaining the income for you and preserving the principal for children or other beneficiaries. When properly drafted, the trust will provide asset protection from long-term care costs, and might provide significant tax benefits.

With an Asset Protection Trust, you will have the power to change the ultimate beneficiaries of the trust. A properly drafted “income-only” trust allows you to keep the income, with the principal distributable to specific beneficiaries of your choice. Those beneficiaries can then choose what they want to do with the distribution, including giving it to you. This structure might help you qualify for Government Programs that DO pay for all or some of your long-term care costs because the assets in the trust CAN NOT be considered by the Government when you apply for benefits from programs that have been and are supported by the taxes you pay.

Even if nursing home care is imminent, planning opportunities exist to protect a substantial portion of the applicant’s assets. Proper use of the Medicaid transfer rules allows you to create security for yourself and your spouse by ensuring that they will receive long-term care without losing your life’s savings.

The crisis in health care and long-term care will shape public policy for years to come. Therefore, it is imperative that seniors, those approaching retirement age and beyond, and the families of those needing long-term care take advantage of the planning opportunities that exist today.

Everyone’s situation is unique, and it is impossible to discuss all of the planning opportunities in this blog entry. As with any planning, a good way to begin is to seek advice from a qualified professional. At Chiumento Law, PLLC, we are dedicated to helping you find solutions to help pay for some or all of your long-term care. Please call (386) 753-3293 or contact us online in Flagler and Volusia Counties.