Safeguarding Your Family’s Home from Medicaid
When it comes to legal tools like trust and tax planning, many people assume they are only relevant to the ultra-wealthy. However, the truth is that middle-class families can greatly benefit from employing asset protection strategies. This is especially crucial for middle-class parents seeking to pass down assets, such as their home, to their children.
At Keystone Elder Law, P.C., our Mechanicsburg middle-class asset protection lawyers specialize in advising you on the most effective methods to safeguard your family’s financial legacy. Whether you aim to shield your assets in the event of Medicaid applications or maximize potential tax savings, we will help you develop a customized plan that best suits your family’s needs. Contact us today to schedule a confidential, no-obligation consultation so we can better understand your family and their requirements.
Shielding Assets from Medicaid and Inheritance Taxes Using Trusts
For many Mechanicsburg middle-class families, their most valuable asset is their home. Consequently, one of the most frequently asked questions we encounter is, “Will I lose my home if I need Medicaid to cover nursing home costs in the future?” This is where collaborating with a middle-class asset protection attorney becomes crucial.
The reality is that nursing home care costs are continuously rising. In 2023, the average person can expect to pay approximately $11,000 per month for full-time nursing home care, a financial burden most middle-class families cannot bear alone. Consequently, Medicaid becomes a necessary option for assistance.
While Medicaid can cover nursing home expenses, it comes with significant implications. To qualify for Medicaid, applicants must fall below specific asset and income thresholds. Furthermore, Medicaid often seeks reimbursement from the estate of deceased beneficiaries, which frequently includes a parent’s house for middle-class families.
However, appropriate planning can protect a home and other middle-class assets from Medicaid. At Keystone Elder Law, P.C., we regularly assist clients in establishing Medicaid Asset Protection Trusts. These irrevocable estate planning trusts allow you to legally shield certain assets from Medicaid. It is crucial to set up such trusts well in advance of the actual need for Medicaid, as there is a five-year “lookback” period for new applicants. Essentially, if you attempt to establish a trust at the last minute or transfer your home as a gift to your children, Medicaid will impose penalties.
Setting up the right trust can also provide additional estate administration and tax benefits for Mechanicsburg middle-class families. Assets held within a trust are excluded from a person’s gross estate for Pennsylvania’s inheritance tax purposes. Consequently, this can result in substantial savings for inheritances passed on to children or other descendants.
Our Mechanicsburg Middle-Class Asset Protection Attorneys Are Here to Assist You
When it comes to asset protection, the key is not to delay. It is crucial to initiate the planning process long before any crisis arises and you or a family member find yourselves in need of government benefits. The Mechanicsburg middle-class asset protection lawyers at Keystone Elder Law, P.C., are prepared to provide you with comprehensive assistance. Call us today to schedule a consultation and take the necessary steps to safeguard your family’s assets.
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REGISTER HERE for LONG-TERM CARE PLANNINGPower of Attorney
A Power of Attorney can be used to give another person the right to sell a car, home, or other property in the place of the maker of the Power of Attorney. A Power of Attorney might be used to allow another person to sign a contract for the maker of the Power of Attorney (the person who makes a power of attorney is called the “principal”). It can be used to give another person the authority to make health care decisions, do financial transactions, or sign legal documents that the principal cannot do for one reason or another. With few exceptions, Powers of Attorney can give others the right to do any legal acts that the makers of the Powers of Attorney could do them themselves. A General Power of Attorney gives the “power of attorney Agent” or simply “Agent” (the legal name of the person who is authorized to act for the principal) very broad powers to do almost every legal act that the principal can do. When Elder Law Attorneys draft general Powers of Attorney, they still list the types of things the Agent can do but these powers are very broad. People often do general Powers of Attorney to plan ahead for the day when they may not be able to take care of things themselves. By doing the General Power of Attorney, they designate someone who can do these things for them.
Normal Powers of Attorney terminate if and when the principal becomes incompetent. Yet many people do Powers of Attorney for the sole purpose of designating someone else to act for them if they cannot act for themselves. It is precisely when persons can no longer do for themselves that a Power of Attorney is most valuable. To remedy this inconsistency, the law created a Durable Power of Attorney that remains effective even if a person becomes incompetent. The only thing that distinguishes a Durable Power of Attorney from a regular Power of Attorney is special wording that states that the power survives the principal’s incapacity. Even a Durable Power of Attorney, however, may be terminated under certain circumstances if court proceedings are filed. Most Powers of Attorney done today are durable.
Yes. At the time the Power of Attorney is signed, the principal must be capable of understanding the document. Although a Power of Attorney is still valid if and when a person becomes incompetent, the principal must understand what he or she is signing at the moment of execution. That means a person can be suffering from dementia or Alzheimer’s Disease or be otherwise incompetent sometimes but as long as they have a lucid moment and are competent at the moment they sign the Power of Attorney, it is valid even if they do not remember signing it at a later date. At the time it is signed, the principal must know what the Power of Attorney does, whom they are giving the Power of Attorney to, and what property may be affected by the Power of Attorney.
Any competent person eighteen years of age and older can serve as an agent. Certain financial institutions can also serve. There is no course of education that agent must complete or any test that Agent must pass. Because a Power of Attorney is such a potentially powerful document, agents should be chosen for reliability and trustworthiness. In the wrong hands, a Power of Attorney can be a license to steal. It can be a big responsibility to serve as an agent.
For Medicaid
Medicare is health insurance and covers medical services such as physician appointments, therapy, blood tests, x rays, medical procedures and hospitalization. Medicare will sometime pay for rehabilitation in a long-term care facility for a period of 20 to 100 days, but not longer. In long-term care, Medicaid covers the cost of ongoing support services for daily functioning, such as room and board in a nursing home.
Medicaid is a federal program that is overseen by the Center for Medicare and Medicaid Services (CMS). In Pennsylvania, Medicaid is called Medical Assistance and is administered by the Department of Human Services (DHS).
In Pennsylvania, Medicaid funds are not available to pay for assisted living or personal care.
For Medicaid to pay for care in a nursing home, an individual recipient must be determined to need a nursing home level of care by a physician and the local Office of Aging. An individual whose income is not greater than three times the poverty level may keep up to $8,000 of total resources, but may otherwise keep only $2,400. The cash value of life insurance counts as a resource, but one car and a residential home does not count as a resource.
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Empowering Clients with Holistic Planning at
Keystone Elder Law
At Keystone Elder Law, we believe that the physical, social, legal, and financial considerations of our clients all intertwine. We utilize an interdisciplinary approach to evaluate each area, which allows for the creation of a plan that addresses the concerns of the individual as a whole as well as the family. To this end, our model of practice includes a Care Coordinator (usually a nurse or social worker), whose expertise complements our team of attorneys.
When the road of life is smooth, decisions about legal and financial matters are easy to push aside for “a rainy day.” Planning ahead, however, will allow for more options as you view the map of where you’ve been and where you want to go. Don’t let a crisis limit your choices or derail your plans.
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