Some 70% of older people in the United States who are in a long term care facility end up on Medicaid, where the state pays for their nursing home care.
In order to avoid this situation, for those who do not have long term care insurance, there needs to be some legal planning that will enable Medicaid planning by a trusted person.
In addition, a close look at the options regarding preserving the elder's house is in order.
The general power of attorney needs to authorize the agent to engage in Medicaid planning. These are often referred to as "asset protection powers." If the general power of attorney fails to address this, it can be legal malpractice.
In our office, we usually direct that the agent may do Medicaid planning so long as they act with the advice and assistance of a lawyer who handles these matters.
In addition, we usually state that if the agent dispossess the principal of any resources in order to preserve them, they must distribute them in a manner consistent with the estate plan.
The primary residence is not counted when determining if someone is eligible for Medicaid. The price for this grace is that the state can and will come back and take your house to reimburse itself for the expense in assuring your care.
If, however, you have the foresight to plan ahead, you can deed your house away and retain a life estate. If this is done sufficiently in advance (five years) then the house will not be counted as a resource and it will not be subject to estate recovery.
This strategy is very sensitive. There are many considerations. Advice from a lawyer who handles these matters regularly is critical for success in this arena.
Planning in this fashion can be the difference between leaving your children nothing or leaving them your house. Most people with children wish to leave them something.
Fortunately, with some advance planning, steps can be taken to assure the house will go to the children, even if the state paid for your care in the last years or months.
Mark F. Winn, J.D., Master of Laws (LL.M.) in estate planning, is a local asset protection, estate planning and elder law attorney. www.mwinnesq.com