Depending on your age, long-term care planning may seem like something you don’t have to consider for many years. Unfortunately, for many of us, life takes over, and the years can pass without taking care of this fundamental matter. According to a long-term care poll, about a quarter of Americans who are 65 or older report doing “a great deal” or “quite a bit” of planning for a potential long-term care situation. Fewer adults in younger age categories participate in any level of long-term care planning.
Individuals who are currently healthy are less likely to plan for long-term care, even though, in reality, your health can change in an instant following an illness or accident. While long-term care planning can seem like an overwhelming task—and certainly not something any of us want to consider—it is an essential component of a comprehensive estate plan. Speaking to the San Jose LTC Planning attorneys at Steburg Law Firm can make the process less daunting. We will guide you through the process after answering your questions and determining your goals regarding long-term care.
What Can Happen if You Fail to Engage in Long-term Care Planning?
When you do not engage in long-term care planning, you could find your entire life’s work paid to a long-term care facility for you or your spouse. Perhaps you’ve worked hard to have a home, a solid bank account, and personal items and leave a legacy for those you love. Unfortunately, long-term care costs have exploded nationwide, making it impossible for all but the super-wealthy to pay for their own nursing home care. Most of us must rely on Medi-Cal for nursing home costs anywhere from $4,000 per month to as much as $10,000 per month.
Just a few years in a long-term care facility could result in everything you’ve worked for being wiped out, leaving nothing behind for your loved ones. Many people still assume that Medicare pays for nursing home care. However, this is not the case. Medi-Cal only pays for those who have few assets and little monthly income. So even when we see family members, neighbors, or friends getting older and developing health issues that require long-term care, we still want to ignore the fact that it could happen to us.
This denial can cost you significantly should you develop an illness or impairment that requires long-term care. A U.S. Department of Health and Human Services report concludes that more than a third (39%) of all U.S. adults will require nursing home care. In addition, more than half of all adults over the age of 65 will experience some level of long-term care services. Of course, nobody wants to burden their spouse or adult children, making it imperative that you consider long-term care planning. Don’t wait until it’s too late—contact San Jose LTC planning attorneys from Steburg Law Firm for all your long-term care needs.
What Is a Medicaid Asset Protection Trust (MAPT)?
Too many people believe they can avoid engaging in formal long-term care planning while still being eligible for Medi-Cal when the time comes. Many erroneously believe they can transfer their assets to their children once their health declines. If the transfers occur three years before you enter a nursing home, Medi-Cal will deny coverage in a five-year look-back period.
If, however, your adult child lives with you for a minimum of two years before the time you need long-term care, you may be able to transfer your home to that adult child under the Child Caregiver Exception. If your adult child is married, you may also need to plan for a possible divorce between that adult child and their spouse to avoid splitting the house’s value between spouses. If the adult child has financial issues that could result in a lien placed on the home, you will need to discuss this with your attorney and make appropriate plans.
A Medicaid Asset Protection Trust is a trust that protects your assets from being counted for Medi-Cal eligibility. In other words, you can protect your assets while still qualifying for Medi-Cal benefits for long-term care. Asset rules for Medi-Cal are strict, with a five-year look-back period in place. Therefore, you will not be penalized when the trust is created and assets are transferred five years before applying for Medi-Cal long-term care benefits. The existence of the assets in that trust will have no impact on your eligibility for long-term care.
When investments are transferred to the trust, you are not allowed to sell the assets, but you can receive the income generated from those investments because a MAPT can be constructed as an income-only trust. MAPTs are irrevocable, so it is crucial that you have a long-term plan for any assets placed in the trust. The primary goal of a MAPT is to preserve your ability to occupy your home for your lifetime, as well as the ability to change the beneficiaries who will receive the trust property.
What Asset Exemptions Are Applicable?
If your home is your principal residence, it is usually excluded when counting assets. However, you must express a wish to return to the home at some time—even if you may never have that ability. Specific other real properties can also be exempt if the net market value minus mortgages or loans is $6,000 or less and the beneficiary is “utilizing” the property by receiving a yearly income of at least 6 percent of the net market value. In addition, household goods and personal effects are exempt, as are jewelry, one motor vehicle, and whole life insurance policies with a total face value of $1,500 or less.
Term life insurance is excluded, as are burial plots, and up to $1,500 in designated burial funds. IRAs and work-related pensions are considered unavailable if you or your beneficiary receive periodic interest and principal payments. An IRA or pension fund in your spouse’s name is considered exempt if you need long-term care. You are allowed up to $130,000 in liquid assets (checking accounts, savings accounts, etc.). The community spouse—who does not need long-term care—can retain up to $137,400 in liquid assets, not including the home and other exempt assets. Property used in part or whole as a business or means of self-support is considered exempt. However, rental property is not exempt unless it is clearly held as a business.
Are There Issues That Are More Common in Long-term Care Planning?
Long-term care consists of many services that meet medical and non-medical requirements. If you or your parents have yet to engage in any level of long-term care planning, you are in what is known as crisis planning if you suddenly need long-term care services. Since Medi-Cal has strict income and asset requirements, this can leave the spouse at home with virtually no funds to live on. Even at this point, a San Jose LTC planning attorney can potentially protect assets for the spouse remaining in the home and for the spouse needing long-term care. Paying for long-term care can drain assets quickly. The five-year look-back period is another issue that can affect your ability to secure Medi-Cal for long-term care. Leaving a legacy to your children is still possible, even when you have neglected to plan.
How to Select the Best Medi-Cal Planning Attorneys for Your Current Situation and Future Needs
As it applies to long-term care planning, Medi-Cal can be extremely complex. It is also a subject that can benefit significantly from highly skilled San Jose LTC planning attorneys from Steburg Law. Remember, not all elder law attorneys provide long-term care Medi-Cal planning, and not all Medi-Cal planners are elder law attorneys. At Steburg Law Firm, we are skilled long-term care planning attorneys and comprehensive estate planning attorneys. When you choose Steburg Law Firm, you receive the following long-term care benefits:
- We can help you with your Medi-Cal application, including providing supporting documentation and filing the paperwork once complete.
- Our attorneys will assist you in meeting the asset and income levels necessary to qualify for Medi-Cal.
- While advanced long-term Medi-Cal planning is ideal, if you fail to plan, we can still help you. Medi-Cal has a more lenient look-back period of 30 months, so we can help ensure you do not exceed this period and can assist with crisis planning when necessary.
- Our attorneys will use our experience and knowledge to implement strategies for protecting your income and assets while maintaining Medi-Cal eligibility.
- We will maintain a goal of maximizing income and assets for the healthy spouse when engaging in long-term planning.
How the San Jose LTC Planning Attorneys from Steburg Law Firm Can Help
Long-term care planning can take time to address. After all, none of us want to think of a time when we can no longer care for ourselves. But, unfortunately, long-term care is the reality for millions of Americans, whether due to an illness or injury or because an older adult simply cannot remain independent. The San Jose LTC Planning attorneys from Steburg Law Firm are ready to help you think about possible long-term care—perhaps for yourself, your spouse, or your parents. We will work with you to craft a long-term plan that allows you to pass assets you have worked your entire life for to your heirs while maintaining your eligibility for Medi-Cal. Contact Steburg Law Firm today.