Davidov Law Group

Medicaid planning is important for many senior citizens because of the high costs that go along with long-term care. The stark reality is that most people simply cannot pay these expenses comfortably out-of-pocket. This is because we are talking about an average annual expense exceeding $136,000 for nursing home care.

One of the misconceptions that is harbored by far to many people is the idea that Medicare will pay for everything once you become eligible for coverage. People who pay into the Medicare program sufficiently are eligible for enrollment at the age of 65 under currently existing laws.

Medicare is important, and it is very helpful, but it doesn’t cover everything in full, and it doesn’t cover long-term care at all. That’s right, you’re going to have to look elsewhere if you need assistance with your long-term care expenses.

That “elsewhere” is Medicaid for a great many people. The majority of elders in nursing homes are indeed enrolled in the Medicaid program. Many of these people were not poor throughout their lives, but long-term care expenses are so extreme they really have no other choice.

There are upper asset limits that you must stay within to qualify for Medicaid. Therefore, a common practice that people engage in is the Medicaid “spend down.” It’s kind of self-explanatory: you spend or give away your assets in advance of applying for Medicaid so that you can get within the upper asset limit.

This involves careful advance planning if you want to do it effectively. The upper asset limit is only part of the equation. You also want to consider Medicaid recovery efforts, and you should carefully evaluate the well-being of your spouse if you are entering a long-term care facility and your spouse is still healthy enough to live on his or her own. There are complex rules governing what is allowable for the healthy or community spouse.

When is it too late to start planning ahead with Medicaid eligibility in mind? In a way it is never too late. Even if you should have started earlier, you can improve your situation by working with an elder law attorney to take the right steps.

However, to be optimally prepared you should get started at least five years before you have any intentions of applying for Medicaid eligibility. This is because of the fact that the Medicaid program examines your financial transactions going back five years to make sure that you have not given away anything in an effort to spend down.

If Medicaid finds evidence of a spend down within five years of your application you will not be deemed immediately eligible for the program. You will be penalized, and this penalty will delay your eligibility. It is important to speak with an elder law attorney, and find out what you need to do to protect your loved ones.

People sometimes take on do-it-yourself projects to save money. Unfortunately, in some cases these efforts wind up costing more money in the long run. This certainly comes into play when you’re talking about estate planning.

There are certain simple steps that you can take to arrange for the transfer of assets to others. Joint ownership is one of them.

Sometimes called the “poor man’s estate plan” with joint ownership you simply add another person as a co-owner of your property. This could be your home, your bank accounts, and your brokerage accounts.

When you die there is just one owner left, and this person would still own the property after you die. This is the long and short of it.

The truth is that this poor man’s estate plan can actually make you poorer.

What happens if the co-owner decides to utilize the funds for his or her own purposes? The answer is that you can do nothing about it because this person owns these resources just as much as you do.

What if someone sues the co-owner? While you are still alive you may watch much of it go down the drain if the co-owner is the target of a lawsuit or if he or she is involved in a messy divorce. Creditors of the co-owner could also target these funds.

What if you tell the co-owner to distribute the money among family members and he or she doesn’t do it? Once again, there is nothing to stop the remaining owner from doing anything he or she wants to do with the money.

When you consider how easy it is to plan your estate properly with the benefit of legal counsel buying into risky notions like joint ownership is probably not a good idea.

There are a lot of different legal devices that are used in estate planning. People sometimes harbor misconceptions about them based on assumptions. We would like to shed some light on three common estate planning instruments here.

The most common estate planning device is the simple last will. This document is typically used to arrange for future asset transfers and to name a guardian for minor children. The thing that is less than ideal about this arrangement is that probate enters the picture when you transfer assets using a last will.

Probate is the legal process of estate administration that takes place under the auspices of the Surrogate’s Court. There is nothing inherently wrong with this process. However, from a purely practical perspective the heirs to the estate don’t receive their inheritances until this process has run its course.

There are ways to arrange for asset transfers outside of probate, and some people prefer this efficiency.

Living Trusts

A living trust is a very commonly utilized probate avoidance tool. You convey assets into the trust and name a trustee who would manage the funds after your death along with a beneficiary or beneficiaries who would receive financial distributions.

These distributions would be made in accordance with your wishes as stated in the trust agreement. These transfers take place outside of the probate process.

Living Wills

This is where the confusion sometimes enters the picture. Some people hear about the things that a living trust accomplishes. They know that a simple will can be used to transfer assets, so they assume that living wills do the same.

In fact, a living will is an advance health care directive. With this document you state your preferences regarding whether or not you would want artificial life-support measures utilized to keep you alive in the event of your incapacitation.