Can Estate Planning Help With Nursing Home Costs?

On Behalf of | Aug 27, 2021 | Estate planning

No one wants to move into a nursing home as they get older. Most people would rather live independently or stay with family members as opposed to living in a communal facility in the care of strangers. However, when someone has pressing medical needs or experiences significant cognitive decline, nursing home care may be the only available solution.

Another reason why many people try to avoid nursing home care for as long as possible is that it is prohibitively expensive. Even shared rooms can cost thousands of dollars a month, rapidly consuming what assets you have left in your retirement savings and exceeding whatever Social Security retirement benefits you receive. Can estate planning actually help you cover nursing home costs?

Creating a trust before you need nursing home care could help you

Planning ahead of time is crucial for those who need financial support to cover nursing home costs. If you wait until you know you need to move into a nursing home, it will be too late. By creating a trust as part of your estate plan, you can engage in asset protection planning.

You move property out of your name, making it inaccessible to creditors. At the same time, you decrease the value of your personal property, making it easier for you to qualify for need-based assistance programs like Medicaid.

Although Medicare and many private insurance programs will not cover the costs of nursing home residency, Medicaid will. You simply have to plan ahead so that your personal property won’t trigger a penalty when you apply for benefits.

A trust will also benefit your loved ones after you die

Creating a trust as part of your estate plan could help you get Medicaid and cover your nursing home costs later in life. That same trust has the added benefit of protecting your assets from creditors after you die.

For example, the Medicaid estate recovery program could bring a claim against all of your assets, including your house. Property held in a trust, on the other hand, will often be safe from such claims. Advanced planning can help you prepare for extreme expenses as you grow older, like the cost of nursing home care. Thinking about your needs and your loved ones’ futures can help you draft an estate plan that gives you optimal protection.