Elder Law Articles, Uncategorized
What Happens if You Don’t Die, but Become Ill for a Long Period?
What Happens if You Don’t Die, but Become Ill for a Long Period? Is an Asset Spend Down in the Nursing Home Inevitable? Ask Our Law Firm for Help With This.Medicaid asset protection planning for long term skilled care can still be done – but you need to start now. Before the Deficit Reduction Act (DRA) was signed into law on February 8th, 2006, you and most clients would plan so that assets would avoid probate or taxation at death. This may no longer be the biggest issue for you and other clients. Now, an even larger issue may be not what happens in the event of your death, but rather what happens if you don’t die, but become ill? In that case, it will become much more difficult to protect your assets. Planning can still be done, but under DRA, you must plan further ahead (at least 5 years). Some problems to avoid are:
- Gifts and other transfers to family members that cause ineligibility. Under prior law you could gift $10,000 to a child or grandchild for college, and this would not be a big problem. The penalty period would probably be gone in two months. Now, if the same gift is made after February 8, 2006, you create not only a two month penalty period, but the penalty period does not begin until the time you enter a nursing home and have zero remaining assets. Question: how do you pay for a nursing home in such a case with no assets and no Medicaid Application Approval? Be sure to ask our advicebefore you gift or transfer.
- Becoming ineligible for benefits because the Government’s look back period is now 5 years. The look back period used to be 36 months or 3 years. Now its 5 years or 60 months. This is quite onerous. Keep good records of everything. The state will look at all payments and transfers for the last 5 years. Without records you may be ineligible for care. Have our office plan and prepare your Medicaid Application.
- Owning non-compliant Annuities. In some cases the State of Illinois must, by law, be named primary beneficiary in the annuity on the death of the annuitant or the ill spouse. This may upset the existing estate and retirement plans of many people. Have us assist your advisors to get proper annuity contract structures.