Ten Mistakes in Protecting Your Home and Assets

Families with loved ones in slow decline, or suddenly faced with an emergency need for care because of a stroke or fall, are fearful of the costs of long-term care and losing their home and assets. This fear can lead some to act hastily on bad information, or poor advice obtained from a relative of a friend who knew someone who had a similar need for care.

Although there are often some similarities to the well-intentioned advice given by such people, the information is often partly or wholly wrong. Even lawyers who do not practice handling Medicaid cases, know that the rules are complicated, sometimes appear contradictory, and are always changing, and will advise people to seek knowledgeable elder law attorneys for advice. Here are some of the mistakes commonly made.

First. Thinking that being executor in a will authorizes a child or family caregiver to handle financial affairs.

A will does not take effect until your death. It does not help at all during your lifetime.

Second. Downloading a boilerplate power of attorney from the Internet and thinking you have effectively provided for your spouse to handle matters for you.

Because of Connecticut land title law, if you get sick, your spouse will not be able to protect the house by transferring it to herself or himself, unless special provisions are in the power-of-attorney that take account of Connecticut law.

Third. Believing that Medicare or your health care insurers will pay for long-term care. Medicare and your Medicare supplement policy will not pay for the cost of long-term care in a nursing home. Average cost of a nursing home in Connecticut is about $10,000 per month, and that will run through a family’s life savings in no time.

Fourth. Thinking a revocable living trust protects assets.

Many people have revocable living trusts and are under the impression that such a trust will protect their home and assets. This is completely wrong, because the State of Connecticut takes the very logical position that if the trust is revocable, you can revoke it and take back the assets. Therefore, the assets are still yours and are unprotected.

Fifth. Transferring your assets to your children.

This almost always creates a penalty period, and does not eliminate risk. It merely switches that risk to your children, who themselves can get seriously sick, their spouses can get sick, they can die, get sued and divorced. And while most people have good children, the children cannot control the risks listed above.

Sixth. Thinking a joint bank account protects half of that account.

This is inaccurate. The State of Connecticut will count the entire bank account as yours, no matter how long the account has been held jointly. Such a joint bank account may also lead to unfortunate results, if the parent dies and only one child shares in the proceeds of that account.

Seventh. There is nothing you can do within five years of needing Medicaid.

While it is true that there is a five year look back period for certain types of assets, it is only a three year look back for transfers prior to February 8, 2006. And the penalties for transfers do not apply to all situations. For example, there is no restriction on transfers to a spouse, even if one spouse is already in a nursing home. And there are many exceptions in the rules promulgated by the Department of Social Services.

Eighth. The State will take my home if my spouse goes into a nursing home.

Rest assured, your home is a protected asset as long as a healthy spouse is living there. Do not panic. Seek advice from a well-qualified elder law attorney to make sure the home stays protected in case the healthy spouse dies before the sick one.

Ninth. Doing nothing.

As with most things in life, preplanning and taking well thought out action is always preferable to awaiting your fate. Unless you have no assets, or have no concern about how financial or medical decisions will be made for you in the event of your incapacity, you should take preventive measures to protect yourself, your assets, and your family.

Tenth. Not getting the advice of an experienced elder law attorney.

Veterans benefits, Medicaid, Connecticut Home Care Program for the Elderly, and other government benefits programs are very complex, sometimes have rules at odds with one another, and are constantly changing. You need competent, experienced advice in tackling the difficult choices, both personal and financial, and solving the problems associated with long-term care.