Are my assets safe if a spouse or I go into a nursing home?

How to Protect Assets When Spouse Goes to Nursing Home


While so many people are financially prepared for the amount they will need in retirement, many don’t think about how a disability could change their situation. Unfortunately, disability is the most common reason for placement in a nursing home. By learning about the relevant Medicaid laws and various asset protection methods, you can maintain your standard of living when your spouse requires long-term care.

Asset protection is always a complicated situation, so it can be beneficial for you talk to a financial advisor who is familiar with the practice.

What Happens to Your Assets When Your Spouse is Placed in a Nursing Home?

If your spouse goes into a nursing home, they may be eligible for Medicaid to pay for their care. The state in which you live determines your spouse’s eligibility and only counts your spouse’s assets when calculating Medicaid eligibility. The spouse who does not live in the nursing home (so-called “joint spouse”) may generally hold up to half of the spouse’s assets. Known as joint allowance for spouses (CSRA), this rule allows the joint spouse to receive up to $137,400 of the couple’s estate.

Unless their income is above a certain threshold, the joint spouse does not have to contribute to the costs of the nursing home even if they are still employed. Conversely, if the income level of the community-dwelling spouse is low, they may be entitled to a portion of the income of the spouse who goes to the nursing home (known as the “institutionalized spouse”). In addition to the general statutory rights of the institutionalized spouse, there are other ways in which assets can be protected.

What is the Minimum Monthly Maintenance Needs Allowance (MMMNA)?

The calculation that determines how much money a cohabiting spouse keeps is called the Minimum Monthly Maintenance Needs (MMMNA). Medicaid spousal protection laws require a minimum of $2,177.50 per month in 48 states, including the District of Columbia. Hawaii costs $2,505.00 and Alaska’s MMMNA $2,721.25 due to the higher cost of living in both states. The maximum is $3,435 per month. Once calculated, the government does not count this as income when determining whether the institutionalized spouse qualifies for Medicaid.

Also, suppose that you or your spouse are trying to get Medicaid and have given assets to your family members in the last five years. Gifts could disable the spouse in the nursing home for a period of time. The government would extend the lockdown in line with the value of the assets and the state average nursing home rate. These are things that can be avoided and planned ahead of time to maximize the money that both you and your spouse can have on hand in this situation.

How to protect assets when your spouse goes into nursing care

How to Protect Assets When Spouse Goes to Nursing Home

How to Protect Assets When Spouse Goes to Nursing Home

If your spouse goes to a nursing home, it doesn’t mean you have to sink your hard-earned cash savings And retirement accounts in spending on your institutionalized spouse. Instead, the following are four ways you can use your finances to get some benefit from your nest egg while Medicaid continues to cover nursing home expenses.

1. Buy a Medicaid-compliant annuity

A Medicaid Compliant Pension can help the institutionalized spouse qualify for Medicaid. Paying an annuity can drain a couple’s resources, which could actually help a couple in this situation. The benefit is that the institutionalized spouse has fewer reportable assets and is more likely to be eligible for Medicaid assistance. In addition, the community spouse receives monthly payments from the annuity and uses them at will in lieu of nursing home expenses.

2. Create a life estate for your property

A life estate legally confers property on one spouse and gives the other spouse the status of ‘residual man’, meaning that they are destined to receive the property after the spouse’s death. Once in effect, a lifetime estate prevents state governments from attempting to take ownership. Regardless of whether the spouse dies at home or in a nursing home, the remaining husband inherits the assets.

A transfer of ownership through a lifetime estate counts against the Medicaid transfer of assets period of five years. If the institutionalized spouse dies within five years of creating a life estate, the community spouse may have to pay a large fine to Medicaid.

3. Purchase long-term care insurance

care insurance helps couples meet the expenses of an institutionalized spouse with a chronic health condition or problem that makes them unable to support themselves. However, this coverage is costly and you must never claim it unless you or your spouse go to a nursing home. However, purchasing long-term care insurance could reduce your wealth and help the nursing home spouse receive Medicaid support.

4. Protection of assets with an irrevocable trust

An irrevocable trust – or in this case a Medicaid Trust – should give everyone a break before creating one. Giving up control of a significant portion of your wealth should only be done for a few reasons: keeping assets away from creditors, reducing taxes, or being eligible for government assistance. Regarding the topic discussed, wealth and wealth placed in an irrevocable trust do not count towards qualification for Medicaid. Therefore, irrevocable trusts can help you get federal aid for nursing home expenses.

However, you should only build up irrevocable trust after weighing the advantages and disadvantages. You give control of most or all of your assets to a trustee. You will also most likely lose access to the trust’s funds and only receive income from the trust’s capital. Additionally, if you are looking to sell and downsize your home, you will need your trustee to sign off on this.

A Attention for protection of your wealth

How to Protect Assets When Spouse Goes to Nursing Home

How to Protect Assets When Spouse Goes to Nursing Home

How much income the joint spouse receives varies from state to state. One way to get around the limit is to allow any minor or dependent child living with the cohabiting spouse to have a 33% increase in the monthly amount.

Because of the Omnibus Budget Reconciliation Act 1993, Medicaid may require reimbursement of nursing home expenses from your estate after your death. If you do not adequately protect your assets, they can be confiscated. Taking your wealth could leave your intended beneficiaries empty-handed.

There are limits on financial gifts for the family before you have to pay taxes. If your gift to an individual family member is worth more than $16,000 in cash or assets in 2022, you must file a gift tax return with the IRS.

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Planning ahead for the possibility of you or your spouse ending up in foster care is vital to protecting your wealth in old age. In the event that this happens, there are ways you can keep your wealth and property by taking timely action. From long-term care insurance to purchase the right pensionAre there ways to position yourself better in such a situation?

Retirement tips

  • A financial advisor may be able to help you find long-term care options. Finding a qualified financial advisor doesn’t have to be difficult. SmartAsset’s free tool matches you with up to three financial advisors operating in your area, and you can interview your advisor matches for free to decide which one is right for you. When you are ready to find an advisor who can help you achieve your financial goals, get started now.

  • Retirement provision and care planning are not always easy. For help see Pension Tax Calculator by SmartAsset This will help you determine the most tax-efficient state in which to retire.

  • Figuring out how much money you need to have saved at any given time to have enough for retirement can be confusing. You can find our resource on the average retirement savings by age to learn more and gauge how close you are.

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