Don’t get Burned By These 5 Common Mistakes in Long-Term Care Planning

When should the spouse at home sell the house?

Let’s say the at-home spouse does not want the too-big, ailing, inconveniently located, etc. house after the other spouse enters a LTC facility.  Assume they may be spending down to Medicaid impoverishment.  The home is an exempt asset for the at-home spouse.  If sold BEFORE the other spouse is on Medicaid the dollars go into the non-exempt column and may well be lost.

When to set up irrevocable burial trusts

Similar to above but for a different reason.  To gain entry to a LTC facility when already eligible for Medicaid is difficult as facilities lose money on Medicaid reimbursement (and rapidly getting worse).  The more money you have at entry, and thus the longer you can pay for care, the better chance a nice one will accept you. Once in (without signing that you will leave when out of funds) they cannot evict you just for turning to Medicaid.  Thus setting money aside in an irrevocable burial trust for them and their children and their children’s spouses (yes, you can do this) before entering a facility may harm the client.

Saving money by paying directly to a caregiver

Yes, this may be much less expensive when not done through an actual caregiving company, but without a signed, dated, and notarized copy of the employment agreement in place before care starts, if Medicaid is later needed – every payment will be considered a gift.  This will disqualify you from later receiving Medicaid when funds run out.

Adult children who list (elderly) parents as beneficiary of their life insurance

Adults who have no children to leave things to, often list their parents as beneficiary of life insurance and more.  If those parents are on Medicaid, or spending down to Medicaid at time of death, that inheritance may go directly back to the state of Wisconsin to repay Medicaid for the care it paid for.  Best to consult an attorney to set up a way for such assets to help, not miss your parents.

Medicaid does not honor prenuptial agreements

If you are older and considering a first, second, (or more) marriage, do not rely on a prenuptial agreement to protect your assets for your children.  Medicaid does not honor them.  Thus if your new spouse has a stroke moments after signing the marriage license, all of your assets are going to be available to pay for the other’s long-term care costs.

If you have questions about what happens when long-term care is needed, what will happen to your things, how to protect some of your assets from these costs, or how to prepare for something that HHS says will happen to 70% of us upon reaching age 65, call TheLongTermCareGuy.com at (920) 884-3030 and let’s plan appropriately.  We can save you a LOT of money!