Long-Term Care Planning for Couples: Strategies to Protect Spousal Assets

Planning for long-term care is a crucial step for couples aiming to protect their assets and secure their financial futures. Here are several strategies that may help you safeguard your assets while ensuring both you and your spouse have access to the care you need.

1. Long-Term Care Insurance: This is a policy designed to cover at least a portion of your long-term care costs. It is best to purchase these policies when you are relatively young and healthy to get the most affordable rates.
2. Asset Conversion: Converting countable assets into non-countable assets can protect your wealth while preserving your eligibility for Medi-Cal, a California program often used to fund long-term care. This strategy can involve purchasing an annuity or increasing the value of your home, as certain assets are not counted towards Medicaid eligibility.
3. Medicaid Asset Protection Trust (MAPT): This irrevocable trust can protect your assets from being considered by Medi-Cal for long-term care purposes. Assets in the trust are not considered countable for Medi-Caleligibility, but it’s crucial to remember that the MAPT should generally be established and funded 30 months before applying for Medi-Cal due to the 30 month look-back period.
4. Spousal Refusal: Some states allow a healthy spouse to refuse to pay for the ill spouse’s care, which might allow the ill spouse to qualify for Medi-Cal. However, it’s important to note that states can seek reimbursement from the refusing spouse, and this strategy may have potential legal and ethical implications.
5. Life Estates: You may also consider creating a life estate for your primary residence. In this scenario, you would deed your home to your children but retain the right to live in the home for the rest of your life.
6. Income-Producing Real Estate: Another option is to invest in income-producing real estate, such as rental properties. The income generated can help cover long-term care costs, and the property itself might not be counted as an asset for Medi-Cal purposes.
7. Caregiver Agreement: A caregiver agreement is a contract in which one spouse agrees to provide care to the other in exchange for a reasonable wage. This can allow couples to transfer assets without penalty under Medicaid rules.

These strategies have their nuances and potential drawbacks, and the rules can vary by state. Therefore, it is crucial to consult with an experienced and qualified elder law attorney who specializes in long-term care planning. They can help tailor a plan to your specific circumstances and provide guidance on how to best protect your assets while ensuring you both receive the care you need. Remember, the earlier you start planning, the more options you’ll have available to you.