As we age, long-term care becomes a significant concern. With the rising costs associated with nursing homes, most people worry about paying for this care without losing their assets. A revocable trust, a vital component in a comprehensive estate plan, can provide peace of mind by protecting one’s assets and fulfilling their wishes.
An experienced and knowledgeable New York estate planning attorney can be an invaluable resource for revocable living trusts, irrevocable trusts, Medicaid and Medicaid applications, Medicaid asset protection trusts, and other legal solutions.
At Sheryll Law, P.C., we understand our clients’ concerns about long-term care, disability planning, nursing home costs, money, and wealth. We have helped many residents on the East End of Long Island protect their wealth with a revocable trust as part of their Medicaid planning, which offers asset protection and flexibility while complying with New York estate law.
This blog answers the popular search query, “Does a revocable trust protect assets from nursing home?”
Continue reading to learn more about the benefits of revocable trusts, then contact us at (631) 506-8440 to schedule a consultation to discuss all the options.
A revocable trust is a legal document that allows you to transfer the ownership of assets to an individual or organization without losing control over them. The individual or organization holding the trust can use the assets for your benefit during your lifetime. When you pass away, the remaining assets will transfer to beneficiaries according to the terms of the trust.
This type of trust protects assets from Medicaid eligibility requirements because individuals applying for Medicaid benefits must meet specific requirements for approval. Assets in a revocable trust do not count when calculating Medicaid eligibility.
However, a revocable trust is just one component of estate planning. New Yorkers should also consider other tools, such as an irrevocable trust, a revocable living trust, trusts for minors and disabled individuals, charitable trusts, and special needs trusts to protect a surviving spouse and family. An experienced trust attorney can help residents on the East End of Long Island craft comprehensive plans that consider their assets and goals.
Nursing Home Care in New York
A nursing home offers long-term care with 24-hour medical, personal, and custodial services for people who cannot live independently. Professionals can administer care in a facility or the patient’s home.
Nursing home costs vary by region and facility. The New York State Department of Health estimates the average annual rate for nursing homes in Long Island is $169,704. On average, New Yorkers can expect to pay between $8,000 and $12,000 per month.
Private sources, such as insurance or out-of-pocket payments, can cover nursing home costs. Medicaid offers another option because it provides financial assistance to eligible individuals. To qualify for Medicaid, applicants must meet specific requirements, including income, assets, and medical need.
Revocable Trusts and Nursing Home Care in New York
As of 2023, the income and asset limits for nursing homes or Institutional Medicaid are:
Monthly Income: $1,677
If a single applicant is married, these numbers vary, underscoring the importance of consulting an elder law attorney.
Married Applicants (Both Spouses Applying)
Monthly Income: $2,268
A revocable trust can effectively protect assets from the cost of New York nursing homes. Assets held in a trust are not counted when calculating Medicaid eligibility, preserving them even if the individual qualifies for Medicaid benefits. Additionally, a revocable trust allows you to retain control over your assets and ensure that your intended beneficiaries receive them when you pass away.
However, using a revocable trust for nursing home planning has potential drawbacks. For example, if the individual needs to qualify for Medicaid within five years of creating the trust, all assets they transfer into the trust could incur a Medicaid transfer penalty. Furthermore, because the law considers money, assets, or income received by the trust as part of the individual’s estate and subject to taxes, consulting with an experienced attorney to ensure that your trust is structured correctly and compliant with applicable laws is vital.
Alternatives to Revocable Trusts for Nursing Home Planning in New York
In addition to revocable trusts, New Yorkers have several other options for protecting assets from nursing home costs, including:
- Medicaid asset protection trusts
- Irrevocable trusts
- Gifting and transferring assets to family members or charities
- Long-term care insurance
Using a Medicaid asset protection trust can effectively protect assets from nursing home costs without transferring them to a beneficiary. With a Medicaid asset protection trust, you can place your assets in the trust, retain control over them, and ensure that any remaining assets pass to beneficiaries according to the terms of the trust.
Irrevocable trusts provide another option for protecting assets from nursing home care in New York. The trust creator cannot modify or revoke an irrevocable trust, and assets they place in the trust are no longer considered part of their estate for Medicaid eligibility purposes.
Gifting and transferring assets to family members or charities can also help protect them from nursing home care costs. In New York, individuals can gift up to $15,000 a year without incurring the gift tax. The transferred assets are not included in calculations for Medicaid eligibility, but income or appreciation generated by the gifted assets may be subject to taxation.
Finally, long-term care insurance can help cover nursing home costs and protect your assets from Medicaid eligibility requirements. This insurance covers medical services, personal care, and custodial care in various settings, such as nursing homes and assisted living facilities. The cost of long-term care insurance varies depending on the coverage level and age of the policyholder.
While each option has advantages and disadvantages, considering them all when planning for nursing home care in New York is critical.
Protect Your Legacy and Create a Secure Long-Term Care Plan with Sheryll Law, P.C.
While a revocable trust offers some benefits, it does not guarantee the protection of assets from nursing homes in New York. However, other options exist, and understanding the pros and cons of each with the guidance of an experienced attorney can help New Yorkers make informed decisions.
Preparing for long-term care involves evaluating your health and financial situation and discovering the legal and government programs that fulfill your needs and desires. At Sheryll Law, P.C., we advocate for our clients and their families on the East End of Long Island, providing a personal experience through developing relationships. We craft documents that suit your family’s lifestyle and ensure you can confidently approach your retirement years because we want to protect what you have worked so hard for. Contact us today at (631) 506-8440 or complete our online form to schedule a consultation.
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The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country, or other appropriate licensing jurisdiction.