CRISIS PLANNING for Single Person with Assets

Don L. Rosenberg

Practice Area:Elder Law

Outcome:Protection of Assets

Description:CRISIS PLANNING FOR SINGLE PERSON WITH HOME AND $300,000 IN ASSETS Bob age 62 individual with early onset Alzheimer’s needs nursing care. Assets: Home worth $250,000 Investments $175,000 Bank Accounts $ 50,000 IRA $ 75,000 TOTAL $550,000 Income: Bob has social security and pension of 2,500 a month Bob’s cost of nursing home care $6,500 a month. He is short $4,000 a month. RESULT WITH NO PLANNING: BROKE IN 75 MONTHS Bob would be left with home (with no way to pay for the taxes, insurance and upkeep unless he rents it) and $2,000 in assets in 75 months or at age 68 he is broke. SOLUTION WITH PLANNING: SAVED $246,000 AND ELIGIBLE FOR MEDICAID IN 29 MONTHS -Home is protected and home does not have to be sold. In addition the adjacent land is also protected as part of the homestead. To avoid potential estate recovery on the death of Bob a Lady Bird Deed is executed in favor of his children. With the remaining $300,000 Bob gives a gift to his children in the amount of $183,000 and places the remaining monies of $117,000 in a non-countable Short Term Immediate Medicaid Compliant Annuity or Medicaid Compliant Irrevocable Promissory Note or a Special Needs Pooled Income Trust. Anyone of these will pay $4,000 a month for 29 months. Once these transactions are completed we apply for Medicaid and Bob is disqualified for 29 months for Long Term Medicaid and approved for Medical Medicaid immediately. On the 30th month Bob contributes his income less a few set offs to the Nursing Home and Medicaid pays the balance. The ½ or 2/3'rds a loaf planning can be applied to any portfolio account not requiring more than 60 months of private pay.