Protecting your assets is one of the many challenges you’ll face as you grow older. This is especially true for families that have to deal with mounting medical and home care costs.
In many cases, individuals are transitioned into a nursing home to provide ongoing care. But these and other services can be expensive, and your assets may be at risk if you’re unable to cover nursing home costs.
Knowing what happens to your assets if you go into a nursing home is the first step to protecting the financial wellbeing of you and your family.
The Financial Challenges You’ll Face When Going Into a Nursing Home
The services provided by nursing homes help older adults who are unable to care for themselves at home while giving their families the peace of mind in knowing that all of their needs are being met.
But the cost of nursing home care continues to rise. For many families, it can be a costly option that places an additional financial burden on top of other personal care costs. Average estimates place this cost at about $50,000-$100,000 per year.
Also, Medicare doesn’t provide long-term coverage for nursing home care while Medicaid only offers coverage based on an individual’s ability to qualify.
But in most cases, existing assets must be used before coverage can be provided, and individuals must have a limited level of income.
Thankfully, there are ways in which you and your family can protect your assets from nursing home costs through sound estate planning.
The following are some strategies that can help you protect your assets when you go into a nursing home:
1. Asset Transfers
Many people choose to transfer some part of their income to their spouses. Your spouse’s income is excluded from having to pay for your nursing home care as a result of the Federal Spousal Impoverishment Act.
Any income you transfer to your spouse is protected under federal law and exempt from requirements to pay nursing home costs.
2. Irrevocable Trusts
An irrevocable trust is an estate planning instrument that individuals use to protect their assets. Irrevocable trusts cannot be changed or canceled without first receiving permission from the trust’s beneficiary.
By transferring your assets into this trust, you let go of your ownership rights. But this can benefit you should you have to go to a nursing home, as these assets are exempt from being used to cover the cost of nursing home care.
Also, any interest or dividends produced by the trust are fully protected.
3. Hire the Right Estate Planning Attorney
The services provided by a skilled estate planning attorney protect your assets and give you the resources you need to develop the right plan for your future.
Your estate planning attorney helps you choose the best options for your needs. This may include the use of a life estate, which allows you to transfer property ownership to a loved one after your death and protects your property from financial claims.
Other strategies such as personal gifts and the use of annuities to help qualify for Medicaid coverage are also available and may be right for you.
Consulting with an estate planning attorney is the first step in planning for the future and protecting your assets.
Nursing home care can provide you and your family with the help you need. But the cost of that care can put your personal assets at risk.
Knowing how to protect your assets ensures that you and your loved ones have everything you need for a financially secure future.