Nursing Home and Irrevocable Trusts
This year our article is following a hypothetical family through their lives to see what role estate planning had on their family. To review prior blogs, go to SeamonLawOffices.com/Blog.
We have worked with the Smith family for years regarding estate planning for several family members and service-connected veterans’ benefits for a son. Most recently our elder law services enabled Joe and his wife Barb to obtain the Veteran’s Aid and Attendance pension.
Joe has been receiving the maximum Aid and Attendance pension for a married veteran (approximately $2,400 per month) for over two and one-half years now, which means he has received about $72,000. His pension reimburses him for unreimbursed medical expenses, so he has been paying his granddaughter for caregiver services in his home.
Unfortunately, Joe is declining rapidly. He is up at night, he is getting quite difficult for his wife and their granddaughter, who are his primary caregivers. Unfortunately, their breaking point was a few weeks ago when he left the house without anybody noticing. He was missing for a few hours, but the authorities helped locate him before anything bad happened to him. This incident made them realize that he was no longer safe at home and the time had come where he needed a skilled care facility (nursing home).
They were nervous because they had heard nursing homes were very expensive. The average cost of a nursing home in West Virginia is now over $11,000 per month which is over $130,000 per year. It does not take long for the average family to spend through their life savings.
Fortunately, they had planned for this time. Although they did not have the foresight to purchase long-term care insurance prior to Joe’s diagnosis, they did create a specific type of irrevocable trust and fund many of their assets into the trust. This trust helped Joe qualify for the Aid and Attendance pension so Joe could live at home longer, but now that same trust would be a valuable tool to enable Joe to qualify for long-term care Medicaid.
I reminded them that the trust’s assets had been in the trust for over five years, meaning those assets were protected now. In addition, Barb had accumulated quite a bit in her IRA so she was very relieved to learn those funds were exempt from Joe’s Medicaid spenddown.
Unfortunately, Barb had come into an unexpected sum of money when her uncle died a couple of years ago and she was so overwhelmed with Joe’s care that she forgot to address that change to their assets. We will have to do a Medicaid spenddown for this portion of their estate. While it is a bit disappointing, the plan will still work with some tweaking.
As it turns out, even though it is unfortunate that Joe needs this higher level of care, he planned well which enabled him to receive care in his home for as long as possible without going broke. His beloved family cared for him for as long as they could keep him safe. Now, due to safety concerns, it was time for the next step. Joe’s family is thankful to have had the past few years with Joe at home, and they are thankful that Joe was willing to have some difficult conversations to achieve these goals for the family. Remember, it is never too early to plan!