Protect Your Assets

Over the past thirty-five years we have learned that the greatest danger to the long-term financial well-being of our clients is the rising cost of long-term care.  Few people have the ability to add another $6,000 to $15,000 per month to their budget without quickly depleting their savings and other resources.  According to the latest research, seventy percent (70%) of Americans age 65 and older will need some form of long-term care.  Imagine ten people lined up in a room, all over sixty-five. Then ponder the reality that only three of those ten will escape the need for long-term care. 

There are only three ways to pay for long-term care:

To self-pay, and generate an additional $6,000 per month ($72,000/year), a person would need a total of $1.8 million in invested assets earning at least four percent (4%) annually. For those of us who don’t have those resources, proper proactive planning can save tens of thousands of dollars from being lost to long-term care costs.

Advance planning follows the rules established by the Texas Department of Health and Human Services involves:

• Exempt Resources. Identifying those assets that do not disqualify applicants from receiving benefits. These assets include, among other items, the applicant’s:
  • Home and its contents
  • Car
  • Life insurance with little or no cash surrender value
  • A qualified retirement plan (401k, IRA, 403b, etc)
  • $2,000 in cash
• Countable Resources. Listing those assets that are disqualifying resources, which include:
  • Other real estate
  • Stocks, bonds and other marketable securities
  • Additional motor vehicles
  • Life insurance with cash surrender value greater than $1,500 and
  • Excess cash above $2,000, among other items.

Exempt resources are typically held in a revocable living trust. Depending on the circumstances, countable resources can either be spent down on purchases like home repairs or renovations, attorney fees, debt retirement, and/or an irrevocable funeral or burial contract, among other things. Remaining countable resources can be transferred to an irrevocable asset protection trust, in which the client is entitled to all income earned by the trust assets and the client’s children or other loved ones are the principal beneficiaries.

Contrary to the belief of those who don’t know and understand Medicaid rules, the need for long-term care does not need to leave the patient or the patient’s spouse destitute. Special rules protect a healthy spouse from being impoverished. Proper planning, with Medicaid rules as the guide, can preserve assets for our clients and their spouses, and still enable our clients to leave a legacy to their children.

If you or a loved one are facing a future in which long-term care appears likely, there is hope and there is help. Click the button below to contact us today!