Estate Planning as a Career

It isn’t just the US Government waiting out there to grab a chunk of your hard earned estate when you become incapacitated or die. Strangely enough, state coffers are frequently enlarged through the mechanism of Medicaid. When someone requires long-term care in a nursing home, unless he or she has a private long-term care insurance policy, their whole estate may belong to the state when they pass on.

Nursing home care is not free, even in county or state operated facilities. Someone, somewhere, has to foot the bill. If you, or your family, does not have resources to pay for the care, Medicaid steps in. While Medicaid is a federal program, funds are allocated to the states for administrative purposes and are subject to state rules and regulations.

People who apply for Medicare aren’t always aware of exactly how the program works, but even more sadly, most people who are forced to apply for Medicare really have no other choice, so it doesn’t matter how it works. By the same token, Medicaid rules have been revised so that if one half of a married couple requires nursing home care, the other spouse doesn’t have to sell the house and live on the street.

Under the most recent Medicaid rulings, when one spouse has to be in a nursing home for 30 days or more, the couple’s assets are assessed and some assets are excluded by virtue of “spousal impoverishment” rules. The couple’s residence is excluded from the asset evaluation, along with household furnishings and personal effects. In some states, the remaining spouse’s IRAs are exempted, as well. The non-ailing spouse is then entitled to half of any remaining assets, subject to minimum and maximum limits, while the other half must be spent on the nursing home care.

In addition, income like Social Security, some pensions, and some interest dividends are subject to “maintenance allowance, (more…)