When you are contemplating your legacy, you may have a certain vision with regard to the inheritances that you would like to leave behind to your loved ones. Making this vision a reality takes careful planning as you build a nest egg for your own retirement with your legacy goals in the back of your mind.
Your active retirement years can be full of fun, travel, and leisure activities if you act within a well defined plan over the years. However, when you are considering the expenses that you may face toward the end of your life, you should certainly brace yourself for long-term care costs.
The majority of senior citizens will someday need help with their activities of daily living, and many will reside in nursing homes and assisted living communities.
We practice law in Sacramento. According to a well researched study that has been conducted by Genworth Financial, the median annual cost for a private room in a nursing home in our area is $150,836. The median charge for a year in an assisted living community is $39,000.
When you consider the fact that people often require multiple years of care, the numbers can get pretty large, and costs have been rising. If you need long-term care in 20 years, the costs can be considerably higher than they are today.
Medicare is not going to be the solution, because the program does not pay for custodial long-term care. The type of care that you would receive in a nursing home or assisted living community is looked upon as custodial care, and Medicare does not pay for custodial care.
All of the above can be rather alarming when you first hear about it, but there is a widely embraced solution. Medi-Cal is another government health insurance program, and it will pay for custodial long-term care.
You have to be able to prove that you have a significant level of financial need to qualify for Medi-Cal to pay for long-term care. To get assets out of your own name, among other strategies, you could convey them into one of several irrevocable Medi-Cal trusts.
Loved ones that you would like to provide for in your estate plan would be the beneficiaries. The assets would not be counted if you were to apply for Medi-Cal, and the resources in the trust would ultimately be transferred to the beneficiaries.
However, with one form of these trusts, you could continue to receive income from the earnings of the trust before you apply for Medi-Cal, and this is another advantage.
It is important to look ahead, because, in certain instances, you have to fund the trust at least 30 months before you apply for Medi-Cal to avoid a penalty.
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Planning for Medi-Cal benefits is complex. It should not be pursued alone or with the all too common non-attorney Medi-Cal “advisors”. These purported counselors like the education, training and experience to provide you with a comprehensive plan. Creation of an irrevocable Medi-Cal trust requires the knowledge and skill or an experienced elder law attorney. If you would like to discuss such planning with an attorney with the proper credentials, contact us through the following page to set up a consultation: Sacramento CA Elder Law Attorneys.