December 21, 2018
What if My Loved One Needs Nursing Home Care Sooner than Later with a Castle Trust | Berry’s Bites
Michigan Elder Law Attorney Christopher Berry reviews how Medicaid works with its 5 year lookback and whether a Castle Trust makes sense even if you are unsure you will make it five years before needing nursing home care.
Chris Berry here and on this issue of Berry’s Bites, we’re going to talk about the castle trust the Medicaid five year lookback period. We have a special type of trust, an asset protection trust called a castle trust. What the castle trust can do is some things that a basic revocable living trust cannot. For example, a revocable living trust can avoid probate and control the distribution upon death. Both of those things are very important. The castle trust can avoid probate, control the distribution upon death, but then offer you asset protection, protecting you from lawsuits, but more importantly starting the five year clock ticking for Medicaid purposes. What Medicaid is is a governmental program that’ll help pay for your nursing home care.
What if My Loved One Needs Nursing Home Care Sooner than Later with a Castle Trust Transcript:
Chris Berry here and on this issue of Berry’s Bites, we’re going to talk about the castle trust the Medicaid five year lookback period. We have a special type of trust, an asset protection trust called a castle trust. What the castle trust can do is some things that a basic revocable living trust cannot. For example, a revocable living trust can avoid probate and control the distribution upon death. Both of those things are very important. The castle trust can avoid probate, control the distribution upon death, but then offer you asset protection, protecting you from lawsuits, but more importantly starting the five year clock ticking for Medicaid purposes. What Medicaid is is a governmental program that’ll help pay for your nursing home care.
A nursing home is that final step in the elder care journey, where you need home care, then assisted living, then nursing home care. The average stay in a nursing home is about two and a half years. One in two people according to recent statistics are going to need nursing home level care. What the castle trust does is it starts that five year clock where if you can make it five years, 100% of the assets in the trust would be protected from that nursing home or Medicaid spend down. What that means is you could have Medicaid pay your base level of care and then a pot of resources available will pay for additional services to improve your quality of life and if you a married a couple to ensure that if one spouse needs long term care, the healthy spouse isn’t completely impoverished paying for that care.
Now, I just wrapped up a workshop and one of the questions or comments I received was “Well, what happens if we can’t make it the five years?” Individual was talking planning for his mom and his dad passed away and mom and wasn’t doing great, but he was unsure of whether she can make it five years or not. He wanted to hold off and think about things, and that’s important. We never want to rush clients into making a decision. We have a very educational approach. But, and this is what I told them is, one of the things we can always do is we can back out of the castle trust. We don’t have to make it five years. It doesn’t put us in a worse position because we’re going to be kicking ourself if five years from now, we haven’t done the castle trust and now mom needs nursing home care.
Because 100% of the assets in the trust could protected from that nursing home or Medicaid spend down. Worse case, we do that castle trust and then she doesn’t make it. Maybe, she only makes it one year out of the nursing home then we unwind everything and so we can rely on our Medicaid crisis planning to protect at least half of those assets. That’s always something that we have in our back pocket is that we can always do Medicaid crisis planning to protect at least half of those assets. If you have a loved one in a nursing home right now, we can protect at least half those assets using what’s called a half loaf plan. Think of it like a loaf of bread. Half of it has to go to the nursing home, the other half we can protect.
The opportunity is if thinking positively, if mom can make it five years, then 100% of the assets are in the trust and we’re in no worse off position than we were before. Something to think about if you have a loved one that you’re caring for and you unsure whether they can make it the five year mark or not, there’s no harm in trying. Because if we do make it five years without needing nursing home care, 100% of those assets are protected. If not, we can always back out of the trust and rely on that Medicaid crisis planning because we don’t want to be in a position where gosh, I wish we did this five years because too often I ran into clients where they say “You know what, Why didn’t I run into you last year or two years or four years ago?”
Because too often, people come in with a living trust that avoids probate and controls the distribution upon death, but they don’t have that asset protection. They don’t have that castle trust. This has been Chris Berry with Berry’s Bites. Hopefully, that was helpful. If you want more information on this, please visit our website and register for one of our upcoming workshops where we go over the castle trust.