Elder Law & Special Needs Planning
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The Parri Law Firm
Almost all of our clients want some level of asset protection. Our clients have worked their entire lives and done well to save something. They usually just want to protect their home and nest eggs against all the risks that life can throw at them. The biggest risk most of our clients face is the high cost of long term medical care. We all know or heard of people who failed to plan and lost everything. Careful advance planning can help ensure that you don't lose your nest egg.
There are essentially two categories of Florida Medicaid asset protection. The first kind is advanced planning which is completed five or more years before a nursing home placement is expected. With advanced planning you have many opportunities for protecting your assets that are not available when you are within the 5 year look back window for penalties. There is no limit as to the amount that can be protected if you get started early enough. The greater the client's assets are, the more options they'll have for long term medical care. Not every plan ends with someone applying for Florida nursing home Medicaid. Florida's long term Medicaid programs don't pay for much in the way of assistance in the home. If a client has the means and wants to stay at home, that will be part of the plan.
Crisis Planning is the second category of Florida Medicaid asset protection. This is the type of planning done within the 5 year look back period for Florida Medicaid. Most crisis planning clients contact us when there is an unexpected nursing home placement and their assets are at risk of being spent down to the $2,000 resource limit. Usually the call starts like this:
Client's daughter: My mom has been in rehab for the last month. I just got a call from the social worker. They said her insurance is going to stop paying in 5 days. They told me my options are to pay privately ($8,000) or that I would have to take her home.
Client's daughter: My mom only has $30,000 in the bank and I work full-time and have 2 small children. I don't know what I'm going to do!
Elder law attorney: Don't worry. You've called the right place. We can help. Your mother is going to get the care she needs and the nursing home isn't going to discharge her to you.
The biggest mistake people make in a crisis situation is not getting experienced legal representation. You will generally have fewer options in crisis planning, but a lot can still be done to preserve the assets that remain. Mistakes in a crisis situation can be very costly.
Our goal is to preserve as much as we can in crisis planning. In most cases we won't be able to preserve 100% of your loved one's assets. While not exhaustive, below is a summary of a few planning options. None of these options should be pursued without consultation with an elder law attorney.
Spend Down - For those who are very close to the asset limit of $2,000, a spend down plan may be appropriate. The purchase of pre-paid burial or cremation is allowable. Do repairs need to be done to the Florida Medicaid nursing home applicant's home? Need a new roof? New appliances?
Personal Service Contract - This a contract made between the Florida nursing home Medicaid applicant and a third party. Usually that individual is a child or other family member. The contract allows for a lump sum payment to the individual for the payment of future care. The types of care generally consist of consultations with professionals, doctors and others in reference to the applicant. It also usually includes visitations, shopping for needs, scheduling of outings or doctor's appointments. The contract is generally based on an hourly rate, multiplied by the number hours a week expected to be preformed, times a number of weeks (based on life expectancy).
Income Producing Property - Florida Medicaid allows applicant's to have rental property. Be careful though. Fair market rent must be charged (no family deals) and the net rent is counted as income so it will be owed to the nursing home. Rent can be offset by taxes, insurance and generally any other re-occurring expense. Mortgage principle and capital purchases cannot though. Florida Medicaid generally looks to the IRS to determine what is deductible or not. One major difference is that there is no deduction for depreciation.
Special Needs Trusts - Applicants are permitted to place their assets into a SNT and those assets immediately become non-countable. Of course there is a catch. The applicant has no control over the assets and for anyone over 64 and up, the assets must go into a pooled special needs trust. In this case, the trustee is an independent third party professional. The great thing about the trust is that it allows the applicant to spend their money as long as it is for their sole benefit. The downside is that it isn't easy to spent a lot of money when your in a nursing home and on the death of the Medicaid recipient, the State of Florida must be paid back for whatever it has paid out in Medicaid. That amount could be anywhere from $5,000-$7,000 a month depending on the circumstances.
The long-term benefits of asset protection are a major reason you should consider a comprehensive estate plan regardless of your age. Your investment in estate planning will pay off many times over in the future. Our practice is devoted to elder law and estate planning, including asset protection. Call us today at (727) 586-4224 so you can get a plan in place early and lets try to avoid crisis planning.