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As you grow older, you may wonder who will care for you if you can no longer care for yourself.  If you own a home or a bank account, you have assets you’d like to protect if you need long-term care. Nursing home care costs can eat away everything you’ve saved over the years. However, there are ways of protecting assets from nursing home costs. Let’s look at the possibilities for keeping more of your hard-earned money while leaving more for your loved ones when you die.

Establish a Medicaid Trust to Plan for Nursing Home Costs

The sooner you start to plan, the better. Medicaid can pay for your nursing home expenses if you start planning at least 5 years before you need Medicaid coverage for the nursing home. 

To get Medicaid benefits when you need them, open an irrevocable Medicaid trust to hold your assets 5 years before needing Medicaid coverage for nursing home costs. Medicaid will not count your trust assets against you when they determine your eligibility if you open the trust 5 years before you need coverage.

Medicaid looks at your monthly income, your assets, and your home value to determine if you qualify for coverage. If your assets and income are below the state limits, you generally qualify. 

An irrevocable trust is a legal framework that can hold your assets in trust. You appoint a trustee to manage your assets. You set the terms of what the trustee will do with your assets. The trustee must distribute assets according to the documents you and your attorney draw up.

With an irrevocable trust, when you face the time in your life that you need to go to a nursing home or assisted living facility, Medicaid will pay for your care expenses. At the same time, you also have a trust that pays you a regular income and buys the extras you may want or need. 

The Medicaid Spend Down

If you start planning early, you can benefit from keeping your assets instead of spending them down in a bid to qualify for Medicaid coverage. 

Without an irrevocable trust, your assets count against you for Medicaid eligibility. Without a Medicaid trust, you must “spend down” your money paying for your care costs until your asset level is low enough to qualify for Medicaid coverage.

You cannot just give your assets away for less than market value or buy anything you want when you spend down to qualify for Medicaid. Medicaid will declare you ineligible for coverage if you give your house to your granddaughter, for example. 

However, you can spend your money on certain healthcare items until you reach the asset limit for your state and still qualify for Medicaid coverage.

Funeral Trust

Another way to protect assets with a trust is by talking to your local funeral home. A funeral trust or preneed contract with a funeral home helps you “spend down” excess assets by placing them in a funeral trust. Placing assets in a funeral trust allows you to qualify for Medicaid care without violating the 5-year look-back period. 

At no time does the funeral home own your assets. A funeral trust is also called a paid preneed contract. 

North Carolina does not count the expense of an irrevocable funeral trust against you during the 5-year look-back period. You can spend on a funeral trust and still qualify for Medicaid.

Spending down your assets on a funeral trust is wise because you can still qualify for Medicaid benefits for home care, nursing care, or long-term care. 

Medicaid Spend-Down for Eligibility

If you didn’t establish a trust before the 5-year look-back period, a funeral trust is an intelligent way to spend down your assets and qualify for Medicaid. During the 5-year look-back period, assets used to purchase an irrevocable burial contract are an allowable transfer when:

  • Purchased for your benefit
  • The benefit of your spouse
  • Your child under the age of 21
  • Your blind or disabled child of any age

Creating a trust with a funeral home in your area can help you spend down assets and also qualify for Medicaid while giving your family peace of mind about your future plans.

Setting Up a Funeral Trust

Funeral homes can help you set up a funeral trust. A Funeral Director can guide you in making decisions that fit your budget and desires for the future. Setting up a funeral trust preneed contract allows you to transfer property or assets into a trust fund covering your future funeral and burial or cremation expenses. 

Funeral trusts allow you to pay funeral expenses in advance, giving your family peace of mind about the future. Making these decisions now can spare survivors many difficult decisions later and help provide you with peace of mind about the future. With a preneed contract, your family has time to rest and grieve your loss instead of making harried decisions. 

When working with a funeral director you trust, seemingly complex plans can become easier to handle. Because funeral directors make decisions like this daily, they understand what choices you need to make and the factors behind every decision in the planning process. 

We Can Help

At Renaissance Funeral Home, we are locally owned and run. Whether you’d like to make a preneed contract or just start the process of planning, we are here for you. Our home offers many kinds of services, including funeral trusts or pre-need plans.  We walk with you through the process of establishing your future plans incorporating your faith, culture, and values. Contact us today and find out how we can help you.