Will I Lose My House if I go to a Nursing Home?
Transcript:
hey guys Mike Frontera here back with
another retirement Theory video so Mike
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what happens to my home if I need
long-term care does Medicaid take it
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this is a question I get with some
regularity and like many things legal or
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financial the answer depends on a few
crucial factors so I'm gonna go over
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these factors and some things that you
can do ahead of time to protect your
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home now before we delve in a quick
caveat I'm not an attorney state laws
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vary considerably and nothing I am about
to discuss is legal advice okay and
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today we're only dealing with your
primary home I'm not addressing the
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protection of any other assets during a
long-term care need in this video so
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let's start out with some good news that
is if you are receiving Medicaid and you
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are still living your home will
typically not be sold to pay for your
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care while most of your other assets
must be spent down in order to qualify
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for Medicaid your primary residence is
an exempt asset an important little
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asterisk though is that when you enter a
nursing home you must provide them with
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a written statement that declares your
intent to return home at some point the
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neat thing is that your spouse will also
not get kicked out of your home after
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you pass away so if you have no kids and
you don't care what happens to your home
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after you're gone you can probably stop
watching but it is good cocktail party
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fodder so you might want to watch anyway
okay
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then when would Medicaid typically force
the sale of your home well if you're
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single or widowed and your receiving
assistance it would happen after you
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pass away and if you're married and
receiving assistance it is a bit more
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complicated again assuming you have
declared an intent to return home and
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either you or your spouse is still
living estate recovery typically does
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not occur once you have both passed if
your spouse hadn't
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received Medicaid assistance than a state
recovery on your home is only done
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sometimes and only in some states now if
both of you have received Medicaid
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however then recovery through a forced
sale is more likely so for people who
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want their home to pass to their heirs
someday there is then some risk of an
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eventual forced home sale should they
receive Medicaid assistance so what are
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some things that can be done to reduce
that risk okay let's start with the
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solid ones if you leave your home to
your child who's under age 21 or to a
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child who is blind or disabled States
will not go after it at least under
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current law that's something that
probably still won't help a lot of
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people the next one's a bit tougher if
you have a child who lives with you and
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has lived there at least two years prior
to you needing nursing home care and
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they can show to the state to their
satisfaction that they kept you out of a
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nursing home longer because of their
help then Medicaid may not try to
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recover the home from them after your
death for those with no children living
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at home you may want to see if your
state allows recovery from both probate
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and non-probate assets in those that do
not simply having your home passed
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outside the scope of your will in thus
outside of probate could do the trick so
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let's look at three ways to do that
because in many cases avoiding the time
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and expense of probating your assets in
your will is beneficial enough to do
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anyway so one way to have your home pass
outside your will would be placing it in
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a revocable living trust now it's
important to note that a living trust is
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one where you typically retain full
control of the asset these trusts are
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not the same as irrevocable trusts and
are often established to hide assets to
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qualify for Medicaid sooner that's an
irrevocable trust okay
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another technique that can work to move
your home outside of your estate is
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setting up something called a ladybird
deed now currently ladybird deeds are
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only allowed in five states Florida
Michigan Texas Vermont and West Virginia
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a ladybird deed basically names
beneficiaries to your home but you still
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have the right to live there and control
the property it doesn't create a five
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year look-back period for Medicaid
eligibility and it has the potential in
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keeping the home in the family in those
states that allow it a more common
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version of this is what's called a
transfer on death deed a transfer on
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death or a Tod deed can be another
relatively easy way to have your home
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passed outside of your will these Tod
deeds are available in a lot more than
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five states but not every state so the
caveat here is that just because you can
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set one up in your state does not
necessarily mean it will protect your
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home from Medicaid estate recovery some
states as I said before allow for these
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deeds but we'll go outside of your
probate estate in their recovery efforts
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finally you could consider whether it
was worth transferring your home to an
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irrevocable trust this would have the
effect of removing your home from your
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possession for Medicaid purposes in fact
many other assets could go in there as
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well like investments in cash and may
keep them from having to be spent down
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during your lifetime in order to qualify
for Medicaid but doing this could
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subject you to a five-year look-back
period for Medicaid eligibility meaning
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if you needed care within five years of
making this transfer you may have a
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period of ineligibility to satisfy
before benefits were available in fact
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there are a number of drawbacks but also
significant opportunities to these
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irrevocable trusts but that is starting
to get way out of the scope of this
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video so we'll save it for another time
now if you've been listening very
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carefully you might have noticed that
how
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many qualifier words I've said here a lot
of mights and mays and under current law
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it's because these laws are continually
in a state of flux and what worked today
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may very well not work tomorrow and
because laws and enforcement of these
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laws varies tremendously between states
so let me finish with this reminder if
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this stuff's important to you I
encourage you to visit within an estate or
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elder law attorney early on and review
your plans with them regularly if you
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want to find out more about working with
me come visit me at www.retirementtheory.com
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or give me a call at (518) 667-2022. Did you hit the subscribe button or follow me on Facebook I think that you should You'll stay up to date on my videos on all things retirement planning once again thank you for joining me see you next time