This can sound like a rather unnecessary overstatement of the obvious, but you have to have assets left if you are going to be able to pass along inheritances to your loved ones. As you are budgeting for your retirement years, you may keep this in mind, and you may have certain intentions.
At the same time, if you are like many people, you may be overlooking a very significant factor. This is why we are addressing a dynamic that may seem rather self-evident.
When you are devising a retirement budget, you are probably evaluating the needs that you will have during the active retirement years that you have always looked forward to throughout your working career. This is only part of the picture.
There is an enormous expense that you may face toward the end of your life, and you might not even be aware of it at the present time.
Nursing homes are extremely expensive. Here in Connecticut where we practice law, the annual average cost for a private room in a nursing home is well in excess of $100,000 a year, and costs are rising. People often require multiple years of care, and 10 percent of people who are receiving nursing home care remain in the facilities for a minimum of five years.
Everyone knows that there is such a thing as senior citizens requiring long-term care, but the reason why there are a lot of people who do not consider the expenses involved is because they assume that Medicare will pay for living assistance if they ever need it. In fact, the Medicare program will not pay for custodial care, which is the type of care you would receive in a nursing home or assisted living community.
Now that we have set the stage appropriately, we can get to the primary point of this blog post. The Medicaid program will not pay for long-term care, but Medicaid will pick up the tab if you can qualify. You are probably aware of the fact that Medicaid is a jointly run federal/state government health insurance program for financially needy individuals.
Since it is a need-based program, there is a $2000 limit on countable assets. To qualify for Medicaid to pay for long-term care so that you can preserve inheritances for your loved ones, you could convey assets into a Medicaid trust.
You would want to take action at least five years before you apply for Medicaid, because your eligibility would be delayed if you divest yourself of assets within this five-year look-back period. The assets that comprise the principal would not be accessible to you, but you would be able to continue to receive income from the earnings of the trust before you apply for Medicaid.
If you would like to discuss the details with a licensed professional, contact us through this page to set up a consultation: Hartford CT Estate Planning Attorneys.