When Do I Need To Start Planning?

By: Sanford R. Altman, Esq., retired

Question:
My parents are in their early eighties and are in relatively good health. My sisters and I have urged them to see an elder law attorney so they can preserve their assets if they ever need to go into a nursing home but they have been very resistant. I was hoping that if they would hear it from you, they would be motivated to change their minds.

Answer:
Thanks for the vote of confidence. The short answer is that, with sufficient advanced planning, we can generally help you retain most, if not all, of your assets for your family. If you wait to start planning until you are close to or even in a nursing home, the savings can be cut in half.

While, it is true that, over the years, there have been times when I have helped clients retain much more than half of their assets at a very late date, the rule is always, “Though it’s never too late, the longer you wait, the more you have to lose.” The legal basis for this statement is very straightforward – medicaid eligibility rules. With nursing homes costing between $12,000.00 and $15,000.00 per month, medicaid is often utilized as an integral part of elder law planning. It is often seen as a “safety net.” Becoming eligible for medicaid sooner rather than later can keep you from having to spend every last dime of your savings on a nursing home. I have never had a client who has told me they would rather all of their assets go to a nursing home than to their children.

As you may be aware, eligibility for medicaid is needs based – they consider the income and the assets of the applicant. They also look at various time periods. Of prime importance is the “look-back” period, currently approaching five years. This is the time period during which they want to know everything that you have been doing with your assets. If you have made certain transfers within the five year period before you apply for medicaid, your application may be turned down. If the transfer was made before the five year time period, it may have no impact at all. From this one example, you can see that the earlier you start planning, the better off you will be.

This is just one small and relatively simplistic illustration of how timing can affect your ability to plan. Medicaid law is very complex and there are many time periods to deal with and each person’s circumstances are different. As you move closer to the time that you may need long term care, your planning options will decrease. Here’s a real life example: Awhile ago, a client came into our office for estate planning – a will, health care proxy and power of attorney. During our initial meeting, he mentioned his concern about being able to pay for long term care. I advised him that it was certainly early enough to plan for that contingency and explained how, if he was going to do it eventually, he would get much more benefit if he did not wait. He said he would talk to his children and get back to me.

Unfortunately, the next call was not until several years later and it was from his children. They advised me that their father’s health had taken a turn for the worst and they needed to see me as soon as possible. While the help I was able to give them towards preserving his assets was substantial, it was still substantially less than it could have been years before.

In this day and age when everyone is looking to get “more bang for their buck,” with elder law planning, timing is everything. But even more important is the peace of mind of knowing that your plan is in place and you no longer have to worry.