We all want to leave our children or grandchildren with money or assets after we pass away. But we also need to ensure that we don’t burden them when going into a long-term care nursing home. How do you balance leaving money for your kids but making sure there is enough to take care of yourself when needed? This is when traditional and Medicaid estate planning comes into play.
We will learn some legal terms in Part 1 of this 2-part blog series. Then in Part 2, we will look at the difference between traditional and estate planning.
Sometimes, the term estate causes you to picture huge houses, lots of cars, and a large amount of wealth. But your estate plan is a collection of legal documents that outline your wishes regarding the distribution of your assets when you die. Your estate plan may include:
This is just the beginning of what your estate plan can include. Your estate planning attorney may recommend other needed documents depending on your situation.
Medicaid is an income-based joint federal and state benefits program that pays for long-term care in a senior facility. We must be ready for this because many people turning 65 will need some form of long-term care in the future.
Some terms to understand are:
Medicaid Asset Limit – Your income and assets must be under $2,000 per month to be approved for Medicaid assistance. These assets can include cash, savings and some investments.
Look-Back Rule – Medicaid sets a limit in which they go back and look at any gifts or money transfers that may show you trying to ‘hide’ your money or assets. In Illinois, the review time limit can go back 5 years.
Asset Spend Down – Medicaid allows you to ‘spend down’ some of your ‘excess’ money to continue to meet the monthly limit. But this usually depletes your savings and leaves little to your beneficiaries after you pass away.
As you can see, Medicaid estate planning can be tricky.
Working with an Experienced Estate Planning Attorney
Both estate planning and Medicaid can be confusing. And when you put the two together… it can become overwhelming. This is why working with an estate planning attorney who understands your unique situation is crucial.
Next, in Part 2 of this blog series, we will look at traditional and Medicaid estate planning.
An estate planning lawyer can advise you on the best options to help you receive long-term care and ensure there are assets for your heirs. To talk to a qualified attorney in Chicago, contact the Estate & Probate Legal Group at 630-864-5835.
We serve Cook, DuPage, Kane, Lake and Will counties.