If your loved one or elderly parents have entered a nursing home, then taking legal steps now can protect their wealth and ensure Medicaid qualification.
Often referred to as the ‘long-term care maze,’ it can be very difficult for those new to elder law to navigate. But taking these steps will pay off in the long run. Our Florida elder law attorneys welcome you to call us today for support through this process.
Ensure Estate Plans Are in Place and Updated
Everyone should have an estate plan, but especially seniors. An estate plan will protect your loved one’s wishes and your family’s wealth from creditors, stressful probate delays and confusion.
While it’s naturally unpleasant to think of these impending thoughts, doing so while your loved one has capacity is highly advised. Avoiding it for too long can be detrimental to the whole family, but especially to the person who needs his or her estate plan done.
We advise that anyone over the age of 18 create and validate a last will and testament,and seek the advice of a professional to consider whether or not a trust is needed.
Last Will and Testament
A will is a legally binding document that records the wishes and intentions for one’s estate after they pass away. It can be used to determine who inherits what. Without it, the probate court will determine the sharing of wealth and assets which is often contrary to what the deceased individual would want.
It is important to note that Florida does not recognize holographic wills (i.e. handwritten wills). Florida will recognize most wills from out of state, but it is still important to review it with a Florida attorney to determine whether it is valid.
Additionally, if your elderly parents already created wills in the past five years or later, now would be a wise time to update it. This is especially true if there have been new grandchildren, marriages or divorces in the family since it was first created.
Regardless if you create a will or not, almost everyone’s estate will have to pass through probate. That can be a very long and stressful process, especially if it’s a large estate with many disputes and claimants. It can take months and in some cases even years to complete.
That’s where trusts can help. There are various different types of trusts, which can allow your loved one’s assets to bypass probate for a faster inheritance. They also allow for greater control over wealth and asset sharing than a will, with the space for unlimited terms and conditions. There are also trusts specifically for the protection of family pets.
Perhaps more importantly, trusts can be used to protect assets from creditors and enable you to qualify for income eligibility requirements. Read on to find out more.
An often overlooked aspect of estate planning is long-term care planning. No estate plan is complete without taking legal steps to ensure Medicaid qualifications for long-term nursing home care, or at least discussing it with your attorney.
Thousands of Floridians over the age of 65 use Medicaid to make nursing home care more affordable. However, a common stumbling block is Medicaid financial eligibility.
There are two limits to be aware of:
- Gross monthly income eligibility limits of: $2,523 (2022)
- Countable asset eligibility limits: $2,000 for single applicant, $137,400 for a non-applicant spouse and $3,000 when both spouses are applying.
To read more about this, see our guide on: Applying for Florida Medicaid: Long-Term Care Benefits for Your Elderly Parent
Remaining Eligible for Medicaid Benefits
So, what do you do if your income or asset levels breach these limits?
Say hello to elder law. With the help of an elder law attorney, you can legally reduce your income and asset levels to qualify for Medicaid.
For example, you can ‘spend down’ your assets until you reach the necessary level by doing things such as making medical equipment purchases, paying off debt or prepaying end-of-life expenses. There are very limited circumstances where I advise a client to do this.
Another route is to use trusts. Medicaid Asset Protection Trusts are important for pre-planning for Medicaid. These types of trusts are used to house an applicant’s assets that exceed the asset limitations while also ensuring eligibility after the five-year look back period.
For income limitations, a common work around is to use a Qualified Income Trust (QIT). QITs, also known as ‘Miller Trusts,’ allow the excess amount of income to be paid out directly to the nursing home from the trust. Any funds left in the QIT after the Medicaid recipient passes away get reimbursed to the State of Florida, up to the amount of benefits received.
However, if you don’t fund the trust properly, then your application can be denied. This sadly happens quite often to people who don’t consult professional help.
Read Related: What Assets May Be Exempt From Probate in Florida?
Protecting Your Parent’s House
If your loved one is helped by Medicaid to pay for their nursing home costs, then the state will attempt to recoup that. This is called ‘estate recovery’ and for most people, their house is likely the only asset of significant value that they own. Therefore, it’s wise to take some steps to protect the property in advance.
Note: Homes are not counted as assets for Medicaid eligibility if the equity is less than $636,000 (in 2022 in Florida).
When protecting the home, you must be very careful as you can potentially violate Medicaid eligibility rules resulting in penalties and disqualification. It’s advised that you always work with a Florida elder law attorney in such scenarios.
The good news is that Florida Homestead protection creates a specific carve-out that protects an individual’s home from creditors, including a nursing home, so long as that is their primary residence.
Transferring Your Home
A common tactic to protect the home when a loved one moves into nursing home care is to transfer the home. You can transfer the home without penalties if it is to:
- Your spouse
- A child under 21 who is blind or disabled
- Into a trust for the sole benefit of a disabled person under the age of 65.
- A sibling who lived in the property during the year before the owner went into nursing home care, and who holds an equity interest in the home.
- A ‘caretaker child’, who lived in the house for at least two years before the owner went into the care facility, and who provided care that previously allowed the applicant to avoid nursing home care.
Putting Your Home in a Trust
Another common route to protect the home is to put it into an irrevocable trust (one that cannot be modified once created). The state cannot recover from these trusts, but your family can still benefit from the property in the future.
Ensure Incapacity Plans Are in Place
It’s also a wise time to ensure that people have been appointed to make decisions on behalf of your loved one should they become unable to make them alone. These include:
- Financial Power of Attorney – (A person who can take care of bills, and financial and legal decisions if your parent is incapacitated).
- Medical Power of Attorney – (A person who can make medical, treatment and life-support decisions if your parent is incapacitated).
There should also be healthcare directives prepared. If your elderly parent doesn’t have these in place, your family may face significant stress and hurdles over important health, financial or legal decisions. It doesn’t take much effort to set these up, so it’s highly recommended.
Consider VA Benefits
Veterans and their surviving spouses may be eligible for VA benefits when there are unreimbursed medical benefits. As your loved one has already entered the nursing home, it may be difficult to qualify for VA nursing home benefits but it’s always worth trying.
Contact a Florida Elder Law Attorney Today
If your elderly parent or loved one has entered or is considering entering a nursing home, our Florida elder law lawyers can help you with Medicaid eligibility and create wealth-protecting estate plans. We regularly help families from different levels of wealth to protect their assets and qualify for Medicaid benefits.
Battaglia, Ross, Dicus & McQuaid, P.A. is U.S. News and World Reports Tier 1 law firm in Florida, specializing in Estate Planning & Probate since 1958. With award-winning experienced attorneys, they can help you set up an estate plan that avoids probate and protects your family’s wealth.
Schedule a free assessment today to get started or to get any questions answered.