Come See Us: It’s Not Too Late

Saul was getting on in years, and he missed his wife who had recently died. So he sold the home, put the $100,000.00 in the bank, and moved into his son Arthur’s home. Every day Saul started his day as always, and he felt healthy as a horse. So he really didn’t see the need to do any financial planning.

But one day Saul fell and broke his hip. Complications set in, and he needed long-term nursing care. He did not qualify for Medicaid benefits, to pay for the nursing home, because he owned far more than the $2,000.00-limit before Medicaid would pay. Now it was too late to do the kind of proactive planning that would have saved most or all of Saul’s money. Would everything have to go to the nursing home?

Fortunately Saul and Arthur went straight to a good elder law attorney. That lawyer proposed that Saul gift half the $100,000.00 to a special kind of trust. This gift would result in a “penalty period,” which the Medicaid rules impose when an applicant has given away assets during the five years before filing a Medicaid application. During the penalty period Saul would have to pay for his nursing-home care. To do that, he could use the other half of the proceeds from the sale of his house to buy a Medicaid-compliant annuity. The annuity would provide an income stream to pay for the nursing home until the end of the penalty period. When that was over, Saul would be left with only $2,000.00, and Medicaid would begin paying for Saul’s care at that point.

That lawyer saved Saul and Arthur $50,000.00.

Created by David Nathan 1/18/19