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Transferring your home into an irrevocable trust can help you protect your home from being used as payment leverage against long-term care assistance. When you transfer your home into an irrevocable trust, you can maintain the right to live in your home for the rest of your lifetime. You can appoint yourself as a trustee for the rest of your life, giving yourself the ability to control your assets. The process starts with the states sending a letter to beneficiaries requesting reimbursement for nursing home costs. If your retirement plan doesn’t include a strategy to cover the possibility of long-term care needs, it’s incomplete. Talk to your financial adviser and an attorney about using a trust for asset protection and what it could do to reduce the risk in your plan.
Setting up an asset protection trust is the best way to protect your estate from being used for care home fees and to preserve your loved ones' inheritance. Many people will be tempted to simply gift their money/property to their children, to avoid care fees. However, you need to be very careful as this gift could be classed as a Deliberate Deprivation of Assets. This is when a local authority decides that you have deliberately reduced your capital to avoid care home fees.
How risky is it to transfer my assets or life savings?
Whilst you cannot avoid paying care fees, by seeking professional help in advance, you can take steps to protect your assets, particularly your family home. As above, it is not necessarily the amount you give away that is important but whether or not it looks like you did so deliberately in an effort to reduce the value of your assets and avoid care home fees. You should be careful with how you go about giving the money away so that you are not accused of avoiding paying for care homes. If you’re over 65, you can apply for MassHealth benefits to cover your nursing home costs.
A trust strategy also takes advantage of that tax efficiency, but it goes a step further by protecting the money from long-term care costs and other retirement risks. You can ask your council for a financial assessment to check if you qualify for any help with costs. You can choose to pay for care yourself if you don't want a financial assessment. The cost of care is rising at a record rate, with the average room in a care home now costing over £33,000 a year. It is no surprise then that people may consider drastic steps to avoid paying for care. In fact, the reality is that the value of the family home is taken into consideration when calculating whether an individual has assets exceeding the means testing threshold of £23,250.
Can I give my assets away?
To avoid disqualification from Medicaid, a person would need to sell or transfer their assets at least 5 years before applying. Doing so extends beyond the look back period, so they can still apply for Medicaid and have it pay for nursing home care later in life. Upon the recipient’s death, they will have no assets for the state to collect from. If an individual pays for some or all nursing home expenses through Medicaid, states can seek repayment upon their death through the Medicaid Estate Recovery Program .
As long as you transfer your home into the trust before the five-year look-back period, your home can be off-limits for MassHeatlh’s asset calculation and protected for your beneficiaries. Downsizing your home partway through that time period typically won’t negatively impact your eligibility. Luckily, there are ways to avoid a nursing home from taking a person’s house. Here’s everything you need to know about how they collect and how you can hold onto your assets if you or someone you know requires nursing home care. Average cost of residential care in a nursing home is $7,908 per month for a semi-private room or $9,034 for a private room. Annually, this amounts to around $100,000 a year which is high enough that even seniors who’ve been saving their entire life may have trouble paying out of pocket.
How local authorities investigate
The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. Always obtain independent, professional advice for your own particular situation. Unfortunately, there isn’t an obvious way, aside from financial planning ahead of old age to give yourself enough funds to meet the cost. They may also suggest having personal help from a care worker (to help you dress/wash/take medication), meals on wheels, or they will suggest either residential accommodation or a nursing home.
In such cases, the local authority may refuse to assist with meeting the costs. Additionally people do not realise how eye-wateringly expensive care for the elderly is until encountering it first hand when securing 24 hour care for a relative. According to healthcare analysts LaingBuisson, the average cost of nursing care is £750 a week. Age UK have a tool that uses location and type of care required to estimate care home costs. The value of half the property is protected by the trust when one partner dies. This means that the surviving partner keeps their half of the property, whilst the other half is held in trust and therefore NOT liable for care home fees.
More information related to paying for care
A lot of people in the UK are responsible for paying their full care home costs. Similar to Notional Capital, this is where you have either given away your right to claim an income or haven’t applied for income you’re eligible for. It means the local authority can treat you as though you’re receiving this money. This means treating you as though you still own money you’ve given away or spent. Each country in the UK allows you some savings that don’t count in your financial assessment.
If you or your loved one need legal assistance preparing for long-term care, Surprenant & Beneski, PC is here to help. Contact our Southeastern Massachusetts estate planning attorneys today to schedule your initial case evaluation. We will carefully review your situation, answer any questions you have, and help you create an effective strategy to protect yourself and your assets. As you will still maintain control over the trust assets, MassHealth will count assets in a living trust against you when you apply for benefits. If the assets place your income level above the threshold, you won’t be eligible. Any assets in your living trust can be counted as countable assets for the purpose of MassHealth eligibility.
Due to the fact the average home in the UK is worth in excess of £250,000 the typical scenario is that anyone that owns their home will be liable for the full cost of their care. However, this could be seen as 'deliberate deprivation' and the sale reversed, with the power to claim care costs from the person the assets were transferred to. If you live in England or Northern Ireland and have assets or savings worth more than £23,250 (£50,000 in Wales and £28,750 in Scotland), you’ll have to pay for your care home fees.
It can come as a shock when a person discovers that they may have to pay tens of thousands, if not hundreds of thousands of pounds to fund their care, which may mean that they have to sell their family home. This would naturally have a huge impact on a person's finances and the inheritance they intended to leave their family. It is of no surprise that people are looking at protecting their assets from nursing home fees and looking at whether they can protect their home.
The local authority will ask about any previously owned assets, and take into account any reasons you’ve had to hand over assets or property to other people. They’ll consider timing, alongside any motive or intention and the fee. You may hope for help with care home fees from your local authority, but this is means-tested and thresholds are very low.
Doing so involves appointing a trustee who controls all assets in the trust. For a home, the Medicaid recipient can access income from the home by renting it out, but the home itself belongs to the trust and it’s estimated value won’t count towards the Medicaid recipient’s asset total. Thanks to two new laws, the Tax Cuts and Jobs Act of 2017 and the SECURE Act of 2019, the timing has never been better for considering moving certain assets to a trust. The act of giving away your money and assets is in itself, not the only thing that can be assessed. Deliberate attempts to reduce your money or assets could also be included. It is evidenced that many of us are living much longer than ever before, advancing well into our eighties and even older.
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