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If your loved one is challenged by dementia, Alzheimer’s, or diminished mental capacity—do these things now.

A large majority of nursing home residents finance the costs of their care through the Medicaid—Long-Term Care program.  Receiving Medicaid to pay for long-term care or nursing home care requires meeting the strict eligibility requirements, which are both health-related and financial-related.   Long-term care can be $8,000 to $14,000 a month. Some things you can do to protect assets from these costs:

father and son

Obtain expanded powers of attorney for property and powers of attorney for healthcare.

Power of attorney documents will not suffice if they are boilerplate documents from your Google lawyer research.   Rather, you must have a power of attorney that creates authority for the planning and application of long-term care strategies and benefits from the federal and state governments. These authorizations are not automatically built into the standard statutory forms. 

Correct the existing estate planning documents.

Estate planning documents should be converted from simple death plans to documents that also contemplate disability and the need to reposition assets to qualify for governmental benefits. This is especially true in spousal situations. Most spouses have wills and trusts, which leave everything to each other. While common, this type of estate planning arrangement can be a problem. 

Example: One spouse is healthy, and the other is ill, but unexpectedly, the healthy spouse passes away first. The will or trust transfers everything to the ill spouse, who is now going into a nursing home at $12,000 a month. With more sophisticated advance planning, this can be averted by placing the assets of the predeceasing healthy spouse in a special needs trust for the ill spouse. This is done by drafting in a way that will not result in the total spend down of the inheritance but rather allow the inheritance to supplement the needs of the surviving spouse for the rest of his or her life, in addition to having access to governmental benefits.

Implement protection strategies BEFORE applying for Medicaid.

Many people make the mistake of applying for governmental benefits too soon, meaning that they still have assets at the time they apply. It is essential that any planning for the repositioning of assets that is both legal and ethical be done before a Medicaid application is submitted. When the application is submitted, the government has a five-year look-back period that requires you to spend down whatever assets have not been correctly repositioned. Thus, you must do the proper asset repositioning before you apply.

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