Estate planning is not just about passing on your property, it’s also about making sure that you have a plan in place for when you can no longer care for yourself. One of the most important decisions to make during estate planning is whether or not to include providing for a nursing home as part of your plan. The decision varies depending on circumstances like age and health. However, many people are surprised by the high cost of living in a nursing home which can lead to an individual being forced into bankruptcy after years of care.
Our California estate planning attorney breaks down your options in this article.
Will I End Up In a Nursing Home?
According to a study presented at the National Institutes of Health, about 1.5 million older adults live in nursing homes. Does that mean you will too?
It’s hard to say.
Do you have existing health issues that might make it difficult or impossible to live on your own? Do you have a family history or critical illnesses that might necessitate you being in the care of professionals later in life? Do you have family and friends that can support you as you continue to age?
These are all questions to ask yourself when you are preparing your estate plan.
Because if you fail to plan for a potential nursing home stay, you risk losing your home and your estate to pay for the high cost of nursing home care.
Protecting Your Assets from Nursing Home Costs
The average cost of nursing home care in California is over $9,000 per month, based on the Genworth cost of care calculator. And that’s just an average. In some California cities, costs can be over $12,000 per month.
With a median annual income for seniors at about $23,000 – this can be difficult to afford. So it’s important to plan ahead and protect your assets from these high costs before they happen.
What type of planning should you do? There are a number of different options available depending on your situation. Consider:
- Consider giving gifts to loved ones before you get sick, with the assistance of your attorneys – if done correctly, this may help protect your assets from creditors. If you anticipate relying on Medicaid, consult with an attorney about making these gifts as soon as possible to avoid the lookback period and risk of asset seizure.
- Preparing a Life Estate for your real estate – an attorney can help you transfer your real estate to a trusted loved one and grant you the remainder for your lifetime. Again, be sure to consult with an attorney well in advance of any illness to avoid reversal of this process.
- Transfer a portion of your income to your spouse – The Federal Spousal Impoverishment Act protects spouses of nursing home residents by allowing them to exclude their own income from payment calculations. If your spouse’s income is less than the state limit, you may be able to transfer some of your income to your spouse, with the help of an attorney, to avoid losing it.
- Consider irrevocable trusts – these options may shield your assets from creditors while allowing you to receive interest and dividend payments without risking your status or assets.
Get Help Protecting Your Assets From Nursing Home Costs
For many people, the cost of living in a nursing home is too high to be sustainable. If you are already thinking about your future and considering whether or not including a provision for long-term care might make sense for your situation, we have some resources that may help you decide what’s best for you. Contact us today.