(Photo above: Will Dennis, Attorney at Law)
If you or someone you know has significant assets and will have to spend them on high long term care costs within the next 5 years, read the following story based on an actual case.*
Edith and Archie have been married for some time. Archie is 78 and is 10 years older than Edith. Archie suffers from dementia, scoliosis, depression and other ailments. Edith has been providing the care that Archie needs. So far he is able to remain at home. They know that Archie’s condition could change dramatically at any moment. When Archie’s condition and care needs worsen he will have to transition to an assisted living facility that will cost $4,000 to $5,000 a month or more.
They have no long term care insurance. Given Archie’s current age and condition it is believed his need for long term care will arrive sooner than later, probably within the next 36 months. Right now they have adequate assets to maintain their standard of living. They realize that if they have to pay for Archie’s high care costs their assets will be spent quickly and dramatically. They know that Medicaid benefits pay for long term care. Edith was referred to my office to evaluate and plan for the day when Archie starts his high care costs.
At our initial meeting Edith explained their situation. Edith agreed they had no idea of how to evaluate or plan and needed direction and planning. We agreed I would provide them with the help they needed. My evaluation revealed that their total assets are approximately $650,000. Archie’s monthly income is $4,000. Edith’s income is $1,400. Archie will not qualify for Medicaid long term care benefits because their income and assets are too high. They will have to pay for all Archie’s care costs until Edith’s assets are down to $117,240, Archie’s are down to $2,000, and his income is no more than $2,163 a month. We looked at Archie’s life expectancy given his age of 78. The Social Security Administration Life Expectancy Table calculates his lifespan as another 9.16 years or 109.92 months.
Given assets of $650,000 and monthly long term care costs of $5,000 for 9 years his care costs could be $540,000 leaving Edith with just $110,000 in assets to protect for her not only during that 9 year period but for the rest of her life. Her life expectancy is another 17.84 years. Archie’s monthly income could be dedicated to paying for his care but given Edith’s monthly income she needs more to maintain her home, expenses and standard of living. They simply cannot afford to pay $4,000 a month for Archie’s care.
I provided solutions which will qualify Archie for Medicaid long term care benefits when needed. Their home will be deemed an “excluded resource” ($300,000) as long as Edith lives there. The remaining $350,000 in assets would be converted to provide for Edith’s care and support and at the same time qualifying Archie for Medicaid long term care benefits. Edith will keep $117,240 in assets any way she chooses.
The remaining $232,760 will be used to fund a special trust for Edith to provide her with income and assets during her lifetime. The assets in the trust will provide monthly income and support for Edith. If she needs more from the trust it is there for her. Edith also has the option of purchasing a Medicaid complaint annuity to provide her with fixed income for her life expectancy. Edith can keep all of her income. Archie’s income can be transferred to a qualified income trust removing his income disqualification.
In the end, Archie and Edith discovered workable solutions that will protect their $650,000 in assets and still qualify Archie for Medicaid long term care benefits. They are confident in their financial future even though Archie will need expensive long term care. Edith will be well protected. They now have peace of mind because they took control of the long term care threat rather than letting it control them.
You or someone you know may too benefit from my evaluation and planning for protecting your assets from long term care costs.
Medicaid long term care benefits are not the only solution. I offer a complimentary initial consult. Call me at 541-388-3877.
Please visit my website at www.willdennislaw.com. ©2014 Will Dennis, Attorney at Law (AAL)
* The names have been changed and are not the names of those in the actual case.
