Too many times you see estate planning “advice” offered online that seems to proceed from the standpoint that all readers have virtually unlimited financial resources. It’s great if you’re in this position and there is certainly nothing wrong with it, but the fact is that most people are not. So this type of information is really not all that helpful for 99% of the population. It is much more challenging to prepare for all the eventualities of aging when you do not have unlimited resources, so you have to be proactive and plan ahead intelligently.
Have you asked yourself how you will pay for long-term care if it becomes necessary? People are living longer than ever, and at any given time 25% of elders who are at least 85 years of age are residing in a nursing home. In 2010 the average cost for a year in a private room in a nursing home in the United States was $83,500. The average nursing home stay is approximately 2 1/2 years, so if you do the math you’re looking at a couple of hundred thousand dollars, and this is certainly no small chunk of change for most people.
One way that you can address these costs is through the utilization of Medicaid. Though an individual cannot qualify for Medicaid if he or she has over $2,000 in countable assets, this does not mean that the community or healthy spouse cannot retain assets exceeding this amount. The community spouse may keep half of the shared assets that existed on the “snapshot date,” this point in time being the day that the institutionalized spouse entered long-term care. There is however a limit of $109,560, but the community spouse cannot retain less than $21,912 of the countable assets even if this figure is more than half of the total.
And remember, the above parameters are applicable to “countable” assets. Your home (up to $500,000 in equity), your personal possessions such as jewelry, furniture, etc., and one vehicle are not counted when your assets are being inventoried for Medicaid eligibility purposes.