Mary came by my office the other day and was very upset. As a widow with grown children she had been able to move in with her 93-year old Uncle Alan three years ago to provide the assistance he needed. Eleven months ago, Uncle Al had a CVA, which caused a brain bleed. After months of rehabilitation, he was able to come home but needed care.
While he can live in the community, his problems have become too much for Mary to handle and, at 73, she is feeling overwhelmed by the demands of his care. While she has hired aides who help out a few hours a day, it is not enough. He is adamant that he will not go into a nursing home and Mary wants to find a way to let Uncle Al live at home, have proper care and for Mary to keep her sanity. Because he has a lot of money, she is concerned that it will not be possible to get him care without depleting all of his assets.
Currently Uncle Al owns:
His house, where they both live: $190,000
A joint checking account with Mary: $ 75,000
An investment account owned jointly with Mary: $135,000 (opened 5/10)
An IRA with six nieces and nephews as Beneficiaries $175,000
I looked over the whole picture and told Mary that I had some good news for her. In New York there is a home care program that will provide aides to assist with many household tasks. They can help with dressing, showering, hygiene, cooking, cleaning and will pay for adult day care. If Uncle Al had cognitive issues, there is a program that would do all of these tasks and also provide supervision.
The really good news is that there is no “look back” so Uncle Al can put all of his assets, except his retirement account and the $14,850 which he is allowed to keep for himself, into a special type of trust that protects all of the transferred assets.
In addition to protecting his assets, Uncle Al can pay his monthly income over and above the $845 that he is allowed to keep, into a pooled trust and then use that money to pay for all of his household expenses. Under this plan, he will not have to use any of his assets to pay for his care and they can all be passed onto to his family, which was the one thing that mattered most to Uncle Al.
I cautioned Mary, that, because of Uncle Al’s advanced age, this asset protection plan would only work in the case of a home care application. If he was a few years younger, he could have used a similar plan and protected nearly all of his assets even if he needed long term skilled nursing care. Even at this very late stage, if it did happen that Uncle Al could not safely stay at home, we would have to reverse what we did now, but we would still be able to preserve nearly half of Uncle Al’s assets.
As I assured Mary, it’s never too late to plan, but it sure makes the best sense to plan while you are in relatively good health.