Louisiana Long Term Care Medicaid Planning Blog

Take Advantage Of Estate Legal Strategies At Least Five Years Before Nursing Home Stay

Hey, I’m here in Thibodaux, Louisiana and we are getting ready for a big presentation here in about an hour for people here in Thibodaux. I wanted to share with you an experience I had yesterday. I met with a woman and she said her mother was in her late 80’s and she didn’t think there was much she could do because her mother only had about 200,000 dollars of banks accounts and investments. About a year earlier mom had transferred some other things to the children, some property and some other cash so the daughter was wondering if there was anything she could do to protect mom’s money because she was going into the nursing home.

Quite frankly we told her no. There was nothing we could do because of the strict Medicaid penalties of if you transfer anything out of your name you are penalized for being eligible for Medicaid for the next 5 years. Mom would have to use up her 200,000 just to get through the next 5 years.

The daughter was very thankful that I shared that information with her and the last thing she said was well me and my husband and I are going to come in and make sure this doesn’t happen to us. So they key there with the Medicaid planning is plan ahead, ideally at least 5 years before any long term care nursing home stay.

If you have any questions 866-491-3884. Have a good day! Go Tigers!

“I Wish I Knew About This 5 Years Ago”

“I wish I would have known about this 5 years ago.” We hear that all the time. By watching this video or reading this blog, now you know. I was working with a couple of daughters yesterday and they are taking care of mom in their home and they see it is possible that in the very near future she may have to go into the nursing home.

Now they are starting to look into how to protect mom’s assets, but frankly it is too late. Mom has a few hundred thousand dollars of assets and mom is fixing to go into the nursing home and she is really going to have to spend the bulk if not all of that down to less than 2,000 dollars before qualifying for Medicaid.

  If they would have taken some action years ago by setting up a trust for mom and it’s really simple to do but you just have to take that action several years before going into the nursing home they could have protected everything. So don’t get caught in the “I wish I would have known about this 5 years ago,” when you are trying to protect the families assets from nursing home poverty.

  It is so important that you get the information early and then take the action that you need to take, ideally at least 5 years before nursing home care is needed.

  If you have questions about that, give us a call at 866-491-3884. Have a great day!

Should You Give Your House To Your Kids?

Hey, this is Paul Rabalais. I've got my purple and gold LSU tie on. Later today I'm going to be driving down to College Station, Texas. Hopefully the Tigers will beat up on Texas A&M tomorrow morning. We'll see.

I was talking yesterday to a gentleman. He had a simple question. He asked, "Can you put your house in your child's name?" So I had to give him the long answer. The short answer is yes, you can put your house in your kid's name but really the question is, should you? Some bad things can happen when you put your home in your kids' names:

1) You lose control over it.

2) You lose your homestead exemption.

3) Your kids will pay a lot more capital gains tax when they sell it because they lose the opportunity to get this step up in basis when you pass away. It could cause them to pay tens or hundreds of thousands of unnecessary tax dollars when they sell it.

4) You start this 5 year penalty period for Medicaid purposes. That's another issue that has to be addressed.

So the real question is: What are you trying to accomplish by putting your house in your kids' names? Also, is there another way you could accomplish what you're trying to accomplish without just putting it in your kids' names?

So there's a lot of tax, succession, probate, Medicaid, and real estate consequences to shifting assets into a child's name, so be aware of that.

If you want to talk to one of our attorneys about that, if you live in Louisiana and want to know if this is right for you just post a comment to this blog post. We'll see it and be able to help you out and make sure you're making the right decision. Have a great day and Go Tigers!

Difference Between Assisted Living and Nursing Homes

People often ask us about protecting their assets and sometimes they'll say "Well, if I have to go into the nursing home or an assisted living facility I want to protect my assets.” I want you to realize that those are two very different things.

Assisted living facilities are all just private pay facilities. You move in there, you may have an apartment, and you may have some assistance. They probably provide your meals, they wash your clothes, but it’s a little bit more independent than the nursing home. Assisted living facilities are all private pay and Medicaid doesn’t offer any assistance with an assisted living center or facility.

Nursing homes on the other hand are different. Many of the residents in a nursing home have qualified for Medicaid. It costs about $5,000-$6,000 each month to reside in a nursing home and you’ve got to pay that cost out of your own pocket unless you qualify for Louisiana’s long term care Medicaid program.

So be aware, assisted living is all private pay and typically not as expensive as a nursing home. In the nursing home some residents are private pay, paying $5,000-$6,000 a month, others qualify for Medicaid. Medicaid pays that cost. Be aware there are two differences there. Have a great day!

What is the Penalty Period for Transferring Assets?

"Should we put our house in our kids' names?" "Should we put our CD's in our kids' names?" Those are questions we always get because families want to find out what they need to do to qualify for Louisiana's long term care Medicaid program if they ever go into a nursing home.

We start with the fact that there's a penalty period. It’s a time period penalty. If you ever take anything out of your name, you're going to be penalized from being eligible for Medicaid for a certain period of time. Here's the complicated mathematical calculation. Let's say mom transferred $80,000 to her daughter. She’s going to be penalized for being eligible for Medicaid for 20 months. You divide the amount transferred ($80,000) by 4,000 which is a special Louisiana number. Do that calculation. For 20 months mom is ineligible for Medicaid. When does that 20 months start? Well it doesn’t start when mom did the transfer. It starts when mom is in the nursing home because she's ill and she has no other assets. She would qualify for Medicaid except for the fact that she had made this transfer. So that’s when the 20 months begins. So be aware of that. The Medicaid manual is complicated and there’s more to it than that.

 If you plan ahead, ideally, 5 years before you go in to a nursing home you can really protect the family’s entire life savings. So if you want to plan in advance and protect what you have for your family you may want to talk to us  866-491-3884. Read through all the other posts in this blog and get yourself familiar with some of the things that you can do and you'll be ready to act once you get in touch with us to get things protected. I’m Paul Rabalais and have a great day.

Shreveport Couple Wants to Protect Their Two Homes from Nursing Home Costs

I met a gentleman and his wife last week. They were from North Louisiana. They have two homes and they are concerned that if they need nursing home care in the future, they’ll be forced to sell their homes to pay for that care.

 So we talked about the home they live in. They can have that and be eligible for Medicaid but their other home; no way would they be eligible for Medicaid. They'd have to sell it and use the money from that sale to pay for their nursing home expenses until they had less than $2,000. So we're transferring those homes to a special kind of trust so that they can:

• Still live in their homes
• Have their homestead exemption, and
• If they have to go into a nursing home and need Medicaid five years from now, the homes and the value of those homes will be protected for them and for their child.

You’ve got to plan ahead. So many people tell me, "I wish I would've known this five years ago." Now that you're watching this video, know that you have to start early; Five years before you go into a nursing home as long as you start at the right time you can protect what you have.

 So if you have questions about that and are interested in talking to us and helping your family through that process. Just call our toll free number 866-491-3884. Have a great day!

Taking IRA Distributions in Two Different Years

We were working with one of our favorite clients last week. She actually went from office to office hugging everybody in the office. We had a lot of fun with her.They were concerned about protecting their money from future nursing home expenses.

One of the accounts they owned was an IRA and it's difficult, if not impossible, just to get an IRA out of your name. If you go into a nursing home you've got to spend it. So what she's going to do is she's going to take some of the money out of her IRA this year while she's in a low income tax bracket, take some out in January of next year. She'll avoid taking all the money out of the IRA and lumping herself into a higher income tax bracket.

Once it's out of the IRA then she can move it into a trust or in another place where she can control it but she and her husband won’t have to spend it if they go into a nursing home. So know that you have some options and it's a very specialized area.

The Medicaid rules are complex, they're different for Louisiana citizens, so you've got to make sure you get good advice before you act to try to protect thing from the nursing home. If you’re interested in retaining our services to make sure you protect what you have for yourself and your family give us a call 866-491-3884. It's a beautiful day out here. Go Tigers!

Getting Married Later in Life: Can You Protect Your Assets if New Spouse Goes Into Nursing Home?

I was working with a woman last week and she was considering getting married. She was 72 and the gentleman she was considering marrying was 70. She started telling me what she had. She had about $400,000 of life savings. she said her husband to be didn't have much. He only had maybe $30,000 or $40,000. She asked me what happened if he goes into the nursing home. I explained in Louisiana the Medicaid rule is if you're married and either one of you go into the nursing home Medicaid looks at the combined assets of both of you. They disregard the fact that it's your separate property and if you have more than $113,640 of what's called countable assets, money investments, then he'll never qualify for Medicaid. You'll have to spend all of your assets and then he'll be eligible for Medicaid. So she mentioned something about "shacking up." I wasn't really sure but I don't think she's going to get married to him. We had kind of a funny conversation because she realized if she got married and he went into the nursing home, she'd have to lose everything. So be aware of that. It's a trap for the unwary. I'm Paul Rabalais, contact us if you need help 866-491-3884 or post a comment to this blog, we'll pick that up and respond to that. Have a good day.

Putting Assets in Trust vs. Putting Assets in Kids' Names: Tax Issues

I want to talk to you about how you can get stuff out of your name for Medicaid eligibility purposes but retain many of the tax advantages that exist when you leave things to your children. I'm talking about what's called the step up in basis. You really lose all of these tax advantages when you just take what you have and you put it in your kids' names. If it's something that has grown in value, you put it in your kids names and they sell it they have to pay a lot of capital gains tax. However, if you take that same asset that has appreciated, put it into what's called a very particular type of grantor trust then when you pass away your children get this step up in basis so when they sell the asset there won't be all of this capital gains tax to pay. Keep in mind there's just some negative tax reasons to put stuff into your kids' names. Negative tax things being your children will have what's called a carryover basis in those assets. Whereas, if you put them in a special type of grantor trust to get those assets out of your name for Medicaid purposes when you pass away your children will still benefit from that step up in basis. All of that appreciation goes untaxed. Be aware that there are some ways that you can set things up to get your assets out of you name for Medicaid purposes but still retain that step up in basis so that when you pass away and the children get the assets, if they sell those assets there won't be capital gains tax to pay. If you have questions about that you can contact our office 866-491-3884. You can even send me an email if you're interested in retaining our services to help you with this. Paul@rabalaislaw.com. Have a great day. Go Tigers!

Putting Assets in Trust vs. Putting Assets in Kids' Names: Control Issues

I want to talk about how sometimes parents, in an attempt to qualify for Medicaid in the future; they put their stuff (their house, their land, their money, their investments) in their kids' names. We've seen it happen a lot and there's some danger in putting stuff into your kids' names. Essentially, you lose control over what you have. If you take an asset that you own and you put it in your children's name any one of a number of things can happen. Children can pass away, children can get sued, they can get divorced, children can make bad decisions, and they can have spouses that oftentimes adversely influence them. So very rarely do we suggest, if you're trying to get things out of your name for long term care Medicaid planning purposes that you take what you have and just put it in your kids' names. Essentially you lose control over what you worked for if you do that. There are other alternatives available where you can get it out of your name for Medicaid eligibility purposes but retain some form of control over those assets. We use trusts quite a bit to take advantage of allowing you to stay in control of what you have. Bottom line, be very wary of just putting stuff into your kid's names. There are other legal things available to you such as putting things into a trust that can enable you to keep control but qualify you for Medicaid in the future. If you have questions about Medicaid eligibility planning and you'd like to talk to us about our services you can call our toll free number 866-491-3884. I'm Paul Rabalais and have a great day!