Carissa Giebel column: Protect assets by planning earlier
11:00 PM, Apr. 23, 2012 |
Is someone you love in the nursing home, or likely heading there soon? Is he or she worried about the cost of care or about losing an asset precious to the family?
These are common concerns among the elderly and their families. The good news is there is almost always something that can be done to protect some assets.
There are three ways to pay for nursing home care.
One way is through a long-term care insurance policy. This is the best option, because most policies cover not only nursing home costs, but also assisted living and in-home care.
This provides the most flexibility, allowing someone to be cared for at home or in an apartment-like facility, which is usually preferred over the nursing home. However, not everyone is insurable or can afford a long-term care policy.
A second way to pay for long-term care costs is to self-pay. This is the least preferred method for most. It can be hard to watch all your hard-earned assets be spent down quickly on the high costs of nursing home care.
However, this is the only option if no planning was done and the individual is not eligible for Medicaid.
Medicaid is the third option to cover nursing home costs. The state has eligibility requirements that must be met before Medicaid will cover these costs. Generally, if there are very little or no assets left to self-pay and no insurance, this is the payment option available.
So what options are out there to avoid self-paying all those hard-earned assets?
The ideal situation is to plan early, before nursing home care is imminent. Planning early usually provides for the protection of the most assets.
The good news is that if there are still assets left, usually some type of planning can be done to protect some of them. Even if you're about to enter the nursing home, recently entered, or been in there for months or years.
The sooner the planning is done, the more assets that can be protected. Without long-term care insurance, all your assets will never be protected. However, sometimes up to half can be saved for your loved ones.
The type of planning done and the amount of assets that can be protected depends on the following: the cost of care, the total assets, the timing of the planning, and the Medicaid eligibility rules at the time.
If the individual has already lost capacity, the only person who can do this planning on the individual's behalf is the power of attorney. If the individual did not do the legal documents ahead of time naming someone as power of attorney, and specifically giving this agent the power to do this type of planning, then it will probably be too late to do any protection planning.
If protecting assets is a concern for you or your loved ones, here are the two big takeaways:
- Make sure the powers of attorney are updated to allow for planning to protect assets.
- The earlier you meet with a professional to do the planning, the more assets that can be protected.