by Brian Hinkle
Traditional estate planning focuses on what will come of an individual’s assets after they pass. It does not address the reality that there is a 70% chance that individuals over 65 will require some type of long-term care, including entry into a skilled care facility. For many people, going to a skilled care facility, for any length of time, results in a significant loss of assets. These are assets that would otherwise have been used to prevent the impoverishment of their surviving spouse or were intended to be passed on to future generations.
Comprehensive long-term care planning can help prevent the depletion of these assets.
Let’s consider an example. Jim is 75 and his wife Jane, 68; own a home worth approximately $350,000. Their other assets include two cars, each worth $35,000; they have $250,000 and $200,000 in their respective IRAs; and they have an additional $550,000 in other assets. Both of their wills provide that upon death their assets will become the property of the surviving spouse and that their two children will receive what is left after both have passed. However, Jim develops severe dementia. Now Jim can no longer live at home and must enter a skilled care facility that costs $9,000 per month.
Upon entry to the skilled care facility, an application for Medicaid, or Medical Assistance (MA) in Pennsylvania, is submitted to determine if Jim is eligible. It’s determined that their home, one car and Jane’s IRA are exempted. However, Jane will only be able to keep a little more than $100,000 from the couple’s other resources for herself and will be required to spend the remaining assets on Jim’s care before he will even become eligible for Medicaid/MA.
An experienced elder law attorney may be able to limit the depletion of Jim and Jane’s assets, despite the lack of long-term care planning. A better option, to help avoid this situation, is to have an elder law attorney develop a comprehensive estate and long-term care plan five or more years prior to Jim’s need for skill care.
The practice of elder law is not, however, limited to the legal issues surrounding estate and long-term care planning and Medicaid/MA eligibility. It can include, among other things, advising and representing clients on issues related to retirement planning, gift and estate tax issues, guardianship proceedings, special needs trusts and other matters.
As you can see, elder law practitioners must be able to address any issues that may arise throughout the lifetime, and thereafter, of a client. At Mette, Evans & Woodside we bring together many attorneys with diverse legal disciplines and vast professional networks to help you and your loved ones address the many facets of life. If you have any questions, please contact us.
Brian J. Hinkle, Esquire