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Transferring your home into an irrevocable trust can help you protect your home from being used as payment leverage against long-term care assistance. When you transfer your home into an irrevocable trust, you can maintain the right to live in your home for the rest of your lifetime. You can appoint yourself as a trustee for the rest of your life, giving yourself the ability to control your assets. The process starts with the states sending a letter to beneficiaries requesting reimbursement for nursing home costs. If your retirement plan doesn’t include a strategy to cover the possibility of long-term care needs, it’s incomplete. Talk to your financial adviser and an attorney about using a trust for asset protection and what it could do to reduce the risk in your plan.
Setting up an asset protection trust is the best way to protect your estate from being used for care home fees and to preserve your loved ones' inheritance. Many people will be tempted to simply gift their money/property to their children, to avoid care fees. However, you need to be very careful as this gift could be classed as a Deliberate Deprivation of Assets. This is when a local authority decides that you have deliberately reduced your capital to avoid care home fees.
How risky is it to transfer my assets or life savings?
Whilst you cannot avoid paying care fees, by seeking professional help in advance, you can take steps to protect your assets, particularly your family home. As above, it is not necessarily the amount you give away that is important but whether or not it looks like you did so deliberately in an effort to reduce the value of your assets and avoid care home fees. You should be careful with how you go about giving the money away so that you are not accused of avoiding paying for care homes. If you’re over 65, you can apply for MassHealth benefits to cover your nursing home costs.
This kind of Trust lets you to ring-fence a percentage of your property for your loved ones to inherit after your death. You need to assign a proportion of the property ownership to your family member while you are still fit and healthy. For example, nursing prices are higher than for a standard care place. They were always available when I had questions and basically walked me through the entire process. I can definitely rest easy knowing my mom will be cared for without wondering how to pay for it.
Can I give my assets away?
If a local authority believes you deliberately reduced your assets to avoid paying for care and you don’t agree, you can make a complaint to challenge the decision. Mark lives in England, which means he’s allowed to keep £14,250 in savings. He has £29,300 in savings but a week before he move into a care home he gives his son £9,000. The local authority decide he’s deprived himself of money and apply Notional Capital rules. So, while in reality Mark now only has £20,300 in savings, the local authority treat him as though he still has £29,300.
It can be a shock to discover just how much you will have to pay to stay in a care home. Many people understandably feel apprehensive about spending their life savings on care. Faced with this situation, some consider transferring their house or savings to a family member – typically a son or daughter – to avoid care home fees. This can seem like a good idea, as it would bring down the value of your assets while also passing on an inheritance to your loved ones.
How local authorities investigate
This is likely to be a very stressful experience at what is already an emotional time. If you need care in your own home, you have to pay the full care fees if your capital is over the national threshold. If you are under the threshold, your local authority will have to contribute towards the cost and will take into account your ‘eligible income’; which is any money that doesn’t come from disability benefits and pensions.
Many people believe that if you transfer your assets and survive for 7 years, this is not a deliberate deprivation of assets (known as the ‘7 year rule’). However, this is a myth; the local authority can go as far back as they like when considering whether or not a gift is a Deliberate Deprivation of Assets. If the local authority organises care for you but you refuse to contribute towards the cost, they can treat this like a debt and apply to the court to request that you pay them back. They can ask for repayment up to the value of the assets they believe you’ve deprived yourself of.
More information related to paying for care
A lot of people in the UK are responsible for paying their full care home costs. Similar to Notional Capital, this is where you have either given away your right to claim an income or haven’t applied for income you’re eligible for. It means the local authority can treat you as though you’re receiving this money. This means treating you as though you still own money you’ve given away or spent. Each country in the UK allows you some savings that don’t count in your financial assessment.
If you or your loved one need legal assistance preparing for long-term care, Surprenant & Beneski, PC is here to help. Contact our Southeastern Massachusetts estate planning attorneys today to schedule your initial case evaluation. We will carefully review your situation, answer any questions you have, and help you create an effective strategy to protect yourself and your assets. As you will still maintain control over the trust assets, MassHealth will count assets in a living trust against you when you apply for benefits. If the assets place your income level above the threshold, you won’t be eligible. Any assets in your living trust can be counted as countable assets for the purpose of MassHealth eligibility.
In a perfect world, you will plan far enough in advance that she will become eligible for MassHealth benefits when you need to move into a nursing home. If you or your loved one needs nursing home services now, Surprenant & Beneski, PC offers emergency MassHealth planning services. We can help you take immediate steps to become eligible as soon as possible, helping you manage excess income improving the likelihood of approval.
Hiding money from social services to avoid paying nursing fees is also against the rules of the law. Local government has been cracking down on those intentionally usingTrusts to gifttheir property to their family and avoid fees. However, it is important to know that doing so in order to avoid paying the fees that you owe will be classed as deliberate deprivation of assets.
We always suggest taking legal advice before you do this, to check it’s right for you. As well as your motives and the timing, your local authority will consider whether your financial choices are in proportion. You must speak to a legal specialist if you are considering the possibility to put house in Trust to make sure that it is set up correctly.
Any assets you’ve transferred within five years of applying to MassHealth will count against you. You will be subject to a penalty period during which you won’t receive any benefits and must pay for nursing home costs out-of-pocket. Planning at least five years before applying for MassHealth benefits can help you avoid nursing home costs. By doing so, you can use the proceeds to pay for nursing home care instead of relying on Medicaid and risk your home being taken away. As an added bonus, you won’t have to pay life insurance premiums that can become expensive as you get older.
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