Sample Married Couple who protected their home equity and their nest egg from being lost to a nursing home.
John & Suzy Planner live in Arizona, have 3 adult children – two who live nearby and one who lives in Wisconsin. John is 68 and Suzy is 65; they are both drawing social security and Suzy has a teacher’s pension. Their monthly income is about $4,500/month total.
They own their home, which is worth $325,000 and has a small mortgage balance left of $70,000.
They each have an IRA account: John has $225,000 and Suzy has $80,000.
John has a stock brokerage account that is worth about $35,000.
They each have a term life insurance policy that pays $100,000 on John’s death and $50,000 on Suzy’s death.
Total net worth is: $745,000
They do not have long term care insurance.
They recently learned that their revocable living trust DOES NOT protect their nest egg and that their home equity can be liened by Medicaid/ALTCS after their death for the total amount of their care costs. So they decide to put some of their assets into an irrevocable Medicaid Asset Protection Trust (MAPT). After some advice and calculations, they put their home, the stock brokerage account, and the life insurance policies into the MAPT, protecting $440,000 and guaranteeing that their home equity, life insurance, and stocks will go to their kids instead of to a nursing home.
Once they get into their later years and enter an assisted living or memory care home, their expenses can average $8,000 per person, PER MONTH. This is not covered by health insurance or Medicare. The $440,000 they put into the MAPT will not count against them for qualifying for Medicaid/ALTCS benefits. Their IRAs may also be converted at the time of application to an exempt asset, protecting another $305,000. Their children will inherit their home equity, stock brokerage, life insurance, and IRAs intact, a whopping $745,000.
This is an example that may not apply directly to your situation, of course. We can’t possibly go over every detail of this hypothetical couple’s situation in this short article, but we do hope it gives you an idea that THIS PLANNING WORKS and it might work for you, too.
If you’d like to know how much you can protect of your nest egg and your home equity, please call our office.