Strategic ownership increases IRA value

Question: My husband and I are in our mid-70s. We make it OK on our retirement checks, but we are very worried that if one of us should go into a nursing home all our assets would be eaten up. What should we do to protect our assets?

Answer: The good news is that you don't have to throw up your hands and surrender everything. There are things you can do to protect yourself against the erosion of your estate from costs associated with long-term care.

The bad news is that the effects of planning are magnified by the passage of time. Translation: the earlier you start planning for this stuff the better. Mid-fifties is better than mid-seventies.

But here we are, so let's do the best we can.

First, investigate asset-based long-term care insurance. Traditional long-term care insurance can require hundreds of dollars per month in premiums. For many folks that's just out of the question.

However, some insurance companies are now offering long-term care insurance that is "asset-based." Rather than keep all your money in the bank, you put some on deposit with an insurance company that offers one of these plans. In return for your deposit, they'll pay you a fixed interest rate and give benefits in the event you need long-term care.

Second, learn more about legal Medicaid planning in Louisiana. Medicaid planning is something (in my opinion) best done by a qualified elder law attorney with much experience in this arena.

You can't just list your kids as co-owners of your bank account and think you've accomplished something. You haven't.

There has been more than a little abuse associated with Medicaid planning, so stay away from anything that sounds too good to be true. Legal Medicaid planning should have nothing to do with hiding assets or lying on Medicaid applications.

On the other hand, courts have taken a dim view of attorneys who have done estate planning for clients, but have ignored Medicaid planning.

One state's Supreme Court said, "Medicaid planning is legally permissible under federal and state Medicaid law…by its actions, Congress has set the public policy for this program and although some might choose a different course, the law has not. Few would suggest that it is improper for taxpayers to maximize their deductions under our tax laws to preserve income for themselves and their families - even though they are by their actions, reducing the amount of money available to government for its public purposes."

Generally speaking, Medicaid planning is the legal arrangement of your legal and financial affairs to both maximize the Medicaid benefits available to you by law as well as the inheritance available to your children.

My observation is that while Medicaid planning may be useful for very wealthy clients, it can be life changing for a family of modest means.

In a recent interview, elder law attorney Joseph R. Gilsoul pointed out several mistakes people commonly make with Medicaid qualification.

"It's almost never too late to take planning steps, even after a senior has moved to a nursing home," Gilsoul said.

But balance is important, Gilsoul pointed out. "You don't want to give away assets too early. But you also don't want to ignore important safe harbors provided by Congress."

"This is a complicated field that most people deal with only once in their lives. Tens of thousands of dollars are at stake."

Bottom line: get the facts, get professional help and then get moving. The sooner the better.