DO YOU KNOW WHETHER YOU NEED ESTATE PLANNING OR MEDICAID PLANNING? 6/2/10
Most people don't. We meet with clients all the time who come in thinking that they need to protect assets from the nursing home and find out they really need new Wills, Trusts and Powers of Attorney. Or, the other way around!
Estate planning is the process of providing for yourself and your family in the event of your retirement, disability or death. Through a properly-crafted estate plan, you put your legal and financial affairs in order so that the assets you have accumulated during your lifetime will be preserved and transferred to your heirs with the least amount of financial and emotional cost. The most common estate planning tools available include a Will, a Trust, a Durable Power of Attorney, a Health Care Power of Attorney and a Living Will Declaration.
This encompasses sitting down with your family to plan out some of the most important issues you face. For example, who will handle your affairs when you are incompetent or dead, how do you want to pass your assets to the next generation and what kinds of medical treatment you want OR DON'T WANT at end of life.
You also have to plan to avoid probate, minimize federal and Ohio estate taxes and not leave a mess for your family. Your plan will vary depending upon your family situation, assets and goals and plans for the future. The more your net worth, the more complicated and more important the planning becomes.
Medicaid planning includes many of the same things as you need for Estate planning. However, the main focus is on how to protect and preserve your assets in the event that you need long-term medical care. It can dove-tail with Estate Planning or it can be mutually exclusive.
Often Medicaid planning means trying to qualify for Medicaid benefits, the only government program that will pay for long-term care at home, in assisted living and especially in the nursing home. However, it is a welfare program. You cannot have much in the way of assets or income to qualify.
With nursing home costs running up to $100,000 per year, people need to plan early to legally preserve as many assets as possible. This may include spending your money on certain protected assets or even giving them away. The planning is not easy, and must follow the letter of the law in order to not run afoul of the many regulations that exist. The longer you wait, the fewer options that exist.
You also need to plan to avoid the state's rights to recover any remaining assets from your or your spouse's estate if you die after having received Medicaid benefits. Again, there is not an easy or clear-cut solution.
So, how do you know which kind of planning you need? And, how do you know what specific planning tools you need among the hundreds of tools available? You must to investigate all the possibilities. Please be sure to see a qualified Elder Law Attorney for assistance. He or she will assist you in focusing your Estate or Medicaid plan on your own personal needs and wants. One size definitely does not fit all with these issues!