Blog

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 articles, go to SeamonLawOffices.com/Blog.

We have worked with the Smith family for years regarding long-term care Medicaid for an elderly parent, service-connected veterans’ benefits for a son, and estate planning for several family members. A few years ago, we helped Joe and Barb create a specific type of irrevocable trust to realign their assets to qualify for long-term care Medicaid and the Veterans’ pension referred to as Aid and Attendance in the future.

Although many people begin using asset protection trusts as they age to prepare for a diagnosis indicating they may have long-term care needs in the future, Joe and Barb did not create their asset protection trust until Joe was diagnosed with dementia. Joe had always known he would be fine with the local VA nursing home which he was entitled to as a veteran and Barb’s family typically was healthy until a ripe old age. But with this diagnosis, they realized Joe might be able to live at home for quite some time, especially if Barb could afford to pay for some help so they reevaluated their previous decision.

The asset protection trust used to help veterans such as Joe must be created and funded at least three years prior to an application for the VA Aid and Attendance pension. Fortunately, it had been a little over three years so Joe and Barb could apply for the improved pension now known as Aid and Attendance. This pension is meant to reimburse the applicant for money they are spending out of their income to pay for unreimbursed medical expenses. These expenses are typically paying for caregivers or care outside the home that is private pay such as a personal care home or assisted living.

Their granddaughter, Mary, has been helping Joe and Barb quite a bit. They pay her a small amount, but she feels guilty taking their money since she knows they are on a limited income. They were so excited to learn that is exactly what the Aid and Attendance is meant to help with! When a veteran is paying somebody for care, this pension can be used to reimburse the veteran. For example, Mary provides about three or four hours of care per day, they would like to pay her $20 per hour which would be about $2,000 per month, but their current income is about $2,500 per month before paying their health insurance premiums. Once they are approved for Aid and Attendance, they could be reimbursed up to the current maximum for a married couple which is a little over $2,400 per month.

That means that Mary can help them, and they can pay her without Mary feeling guilty that she is taking her grandparents’ money. Further, since the VA does not require the caregiver to have a specific certification as a caregiver, veterans can accept help from family and friends they are comfortable with or choose a professional caregiver. Eventually Joe, may need more assistance than Mary can provide, and they may find they need to use that money to pay a professional caregiver or towards the fees in a private pay facility.

Depending on how Joe’s illness progresses over time, he may need care in a skilled care facility, so we will discuss how that would work with the trust next month. This is a great example that it is never too early to plan.