WHAT CAN I DO TO PROTECT MY ASSETS IF I EVER NEED TO ENTER A NURSING HOME?

            If you are married, you might consider creating and funding a revocable living trust that provides for total distribution to the estate of the first of you or your spouse to die.  Your will would provide for distribution of all probate assets to a testamentary trust for the benefit of your spouse.

            Such an arrangement is specifically exempted from the penalties that are imposed upon transfers to irrevocable living trusts.  The assets in the testamentary trust are treated as entirely exempt under the Medicaid rules.

            This device does no harm if either the husband or the wife needs nursing home care before the first of them to die.  Since the trust is revocable, the assets are available for effective Medicaid planning at that time.

            When you make your will there are some good reasons to consider the testamentary trust device.  These reasons center on the fact that it is the husband who usually dies first and the wife who needs nursing home care.  Consider this:

1. The chance of requiring nursing home care increases with age.  Today the average life expectancy of a woman is 79 years – that is over seven years longer than for men.
2. Two out of three nursing home residents are women.  The typical nursing home resident is an 85-year-old woman who enters a nursing home because she lives alone or no caregiver is available.
3. Four out of five assisted living residents are women.
4. Diseases of old age, such as Alzheimer’s disease and osteoporosis, disproportionally affect women.
5. The population of women aged 65 and over is projected to increase by 67 percent from now until 2025.  In the same time span, the population of women 85 and over is expected to increase by 57 percent.

Popular wisdom has it that people should have revocable living trusts to avoid probate.  Here is an instance in which probate can save you your life savings!  Popular wisdom can be stupidity dressed up in princely clothing.  Better to rely on expert advice.

SHOULD I BUY NURSING HOME INSURANCE?

            As the law now stands in Indiana, it is possible to preserve all your assets and still qualify for Medicaid, even if you have already entered a nursing home.  As long as this is possible, nursing home insurance seems like an unnecessary expense.  If the law ever changes, nursing home insurance may seem more attractive.