For Seniors in the Middle Class Who May Need Long-Term Care: 5 Things You Must Do to Protect Your Assets


One of the greatest fears that most of our clients have is the loss of all their assets to an extended home care, assisted living or nursing home stay. 66% of all nursing home residents finance their stay through the federal Medicaid program. But receiving Medicaid to pay for your nursing home requires meeting the eligibility requirements, which consist of both health eligibility issues and financial eligibility issues.
Besides the potential option of trying to qualify for long-term care insurance, here are 5 things you must do to have any chance of protecting your assets from the devastating cost of long-term care, which can be the equivalent of $8,000 to $10,000 a month in the Chicagoland area.
1. Obtain expanded powers of attorney for property and powers of attorney for healthcare.

These documents will not suffice if they are the plain-vanilla variety. Rather, you must seek powers of attorney that create authority for the planning and application of long-term care strategies and benefits from the federal and state governments. These authorizations are not automatically built into the standard forms, so you must have these forms drafted by an elder law attorney who understands the requirements of potential future long-term care and eligibility for governmental benefits.

2. Correct your estate planning documents.

This means that the documents must be converted from documents that simply plan for the certainty of death to documents that also contemplate the need to reposition assets to qualify for governmental benefits. This is especially true in spousal situations because most spouses have what we call “sweetheart” wills and trusts, which leave everything to each other. This type of estate planning arrangement, while common, may not be optimal. Let me give you an example: you have a healthy spouse and an ill spouse, but unexpectedly the healthy spouse dies first, thereby allowing the “sweetheart” wills and trusts to transfer everything to the ill spouse, who is now going into a nursing home at $10,000 a month. With more sophisticated planning, this unnecessary spenddown can be averted because on the death of the healthy spouse, the assets can be placed in a special needs trust for the ill spouse. This is done by creating trusts that under current law do not require the total spend down of the inheritance, but rather supplement the ill spouse’s needs for the rest of his or her life, in addition to having access to governmental benefits.

3. Obtain a blueprint (i.e., a planning report custom tailored to you).

Before we engage in any strategies during your life’s three phases: 1) preplanning years, 2) wait-and-see type years, or 3) crisis years, we outline the different strategies that can be used during any of these three life phases. This is similar to what an architect does in creating plans for a building before the actual building is built. The reason is, once the plans are put in place they are not as easy to adjust. It makes more sense to get it right the first time around, so it will help you understand the options and help you select the right option the first time.

4. Do not sign an application for a nursing home and do not sign a contract for a nursing home until a qualified elder law attorney has reviewed them.

Many nursing homes will assume that whatever assets you list in a nursing home application are intended to be spent by you at their nursing home. Similarly, they will expect you to sign a contract for the nursing home services without having it reviewed by your attorney. Don’t make either of these mistakes. It is important that the application be reviewed by elder law counsel so that the correct listing of assets can be made with an indication of what assets are earmarked for asset protection. It’s also important that the contract be reviewed by a qualified elder law attorney so that you don’t sign a contract that has harmful provisions in it. Quite often there are provisions that require arbitration, or provisions that waive liability on the part of the nursing home in taking care of your loved one.

5. Implement your protection strategies BEFORE you apply for Medicaid or VA benefits.

Many people make the mistake of applying for governmental benefits too soon, meaning that they still have assets at the time they apply. It is essential that any planning for the repositioning of assets that is both legal and ethical be done before a Medicaid or VA application is submitted. Once the applications are submitted, the government’s 5 year look back period requires you to spend down whatever has not been legally and ethically repositioned by your elder law attorney. Thus, do the planning before you apply.


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Phone: 847.698.9600

Fax: 847.698.9623


Di Monte & Lizak, LLC,

216 Higgins Road,

Park Ridge, IL 60068