Protecting Assets of a Parent in Failing Health

When you’re contemplating your old age — or caring for someone who is elderly — you first have to focus on three key items:

• Taking care of oneself and one’s possessions. To whom do you wish to leave a particular possession? Ensure that you have a valid up-to-date will or trust documents, and a durable power of attorney for financial affairs.
• Finding ways to discuss financial decision-making. Everyone needs professional information and help.
• Determining how to have enough money to provide care and not leave survivors alone and destitute. You do not want to make financial decisions based on emotion and short-term urgency.

Consider the following strategies:

Suppose you have $150,000 in health care bills a year. In that case, there’s a good chance your household would owe little or no taxes. This is a good time to accelerate distributions from tax-deferred retirement accounts. Though they are taxed, the tax may be canceled out by deductions for the health care bills. This kind of balance is essential.

Evaluate cash flow needs and remain invested to realize gains on a portfolio that is ultimately dropping in value as you withdraw from it. People think Medicare will cover all their costs, but its coverage is minimal for long-term care: 100 days in a nursing home for rehabilitation. It’s not custodial care. Once Medicare ends, you must either pay privately of make yourself eligible for Medicaid (Title XIX).

You may decide to look into a home-care program. In Connecticut, for instance, a person is limited to a certain amount in savings and retirement accounts to be eligible for assistance under the Connecticut Home Care Program for Elders. This program can help keep a person in their home but there are strict qualification criteria.

Find out whether your primary residence is counted for home care. As long as you have less than a certain amount of equity in it, it is not (this amount is updated occasionally). If it’s worth more, you can take out a mortgage to reduce the equity.

Understand the “look-back” period on asset transfers. Medicaid has a five-year look-back period for transfers of assets.

You can see how complicated this can get. Never make long-term decisions for yourself or a loved one without considering the substantial implications. Call us today to discuss a plan for yourself — or your elderly relations.

Do you have questions?

Count on your experienced team at Ericson, Scalise & Mangan, PC to provide you with sound guidance for your Estate Planning, Elder Law, Real Estate, Probate, Trust & Estate Administration, and other legal needs. For assistance, contact us today at 860-854-3809, or email us at info@esmlaw.com.