Have Your Cake and Eat It Too

Traditional Medicaid Asset Preservation Planning enables the well spouse to protect some or all of the assets while allowing the spouse in the nursing home to obtain Medical Assistance to pay the cost of nursing home care.  Post-Medicaid eligibility planning techniques enable the well spouse, should she predecease the spouse in the nursing home, to pass all of the assets to children without having to pay back any of the nursing home costs.

This type of traditional Medicaid planning, however, does nothing to preserve assets for the well spouse should the well spouse also require long term care in a nursing home sometime in the future.  Indeed, many of the powerful asset preservation tools available to a married couple cannot be used to preserve assets for a single person seeking Medical Assistance benefits to cover nursing home costs.

Consequently, even where a couple has done asset protection planning when one of them enters a nursing home, after that individual has died, the well spouse remains at risk to lose all of her assets in the event she should require long term nursing home care.

William M. Gatesman has been a leader in developing asset preservation techniques for individuals and families facing the possibility of high long term care costs.  Mr. Gatesman’s latest development in long term care asset preservation strategies is the Spousal Asset Preservation Trust.

Under the Spousal Asset Preservation Trust strategy, both husband and wife execute Wills within which there is a trust designed to hold property for the surviving spouse.  The Will, however, does not put any property into such trust.  Rather, such trust would be funded, if at all, by property passing into the trust outside of probate, by Pay-on-Death account titling or beneficiary designation.

Because property passes into the trust in this manner, it is not subject to a surviving spouse’s statutory right to “elect against the will” and get access to the property held by the deceased spouse.  Such spousal election, if it were available under this strategy, is a way in which the Medicaid rules force the family to use assets to pay for medical care costs.  Similarly, such property is not subject to Medicaid estate recovery through the probate of the deceased spouse’s estate.

If the spouse in the nursing home had executed a will with a Spousal Asset Preservation Trust and an appropriate power of attorney, then, when that spouse reaches the point where death is imminent, the well spouse can take action under the power of attorney to ensure that all of the couple’s assets – assets which, up until that point were titled in the well spouse’s name – pass outside of probate into the Spousal Asset Preservation Trust under the Will of the spouse in the nursing home at the time of that person’s death.

The effect of this strategy is that, after the nursing home spouse dies, all of the property remains to be used by the well spouse, but the moment the well spouse falls ill and requires nursing home care, such property is not considered an available resource that would cause the surviving spouse to lose Medicaid eligibility.

The Spousal Asset Preservation Trust is a cutting edge tool in the Medicaid asset preservation planning field.  To learn more about this strategy and whether it might work for you, please click on the Contact link at the top of this page and send Mr. Gatesman an email.