Does Assisted Living Take All Your Money?

Why is it a Misconception?

There's a reason why the costs of assisted living continue to be a challenge to many seniors. Well, they do not save enough to last them until their last days on earth. This doesn't, however, mean that the costs of assisted living are affordable to many seniors. No, they aren't. As such, many seniors often end up paying all their money to the assisted living facility, especially if they live long enough in the facility.

Again, failing to set up your finances properly for long-term care could see your resources dwindle quickly. And because we all do not know when we might suddenly need long-term care in an assisted living facility, it's in your best interest and those of your loved ones that you start preparing for that likelihood now.

We must admit that planning to save money is one of the most sensible things to do, especially if you're a senior citizen looking for a way to ensure that your money outlives you. But even with that, getting the right care is, without a doubt, the most important thing. So it makes little or no sense to forego care or avoid moving to an assisted living facility altogether just because you harbor some misconception that the assisted facility might take all your money. In short, do not sit at home in pain while threatening your well-being just because you think that an assisted facility will take all your money.

Additionally, the fact that many senior citizens think that an assisted living facility will take all their money is almost universally based on hearsay. In other words, you should risk your life and deprive your old bone of the care that they need just because a friend or relative told you that an assisted living facility might take all your money. Instead, it's important to stay informed and look for ways that can help you save a large portion of your assets if any. 

Why is there the Idea that an Assisted Living Facility can Take all Your Money?

You are probably wondering; where does the idea that an assisted living facility might take all your money if it is just a mere conception? Well, this is a concept that's merely in place to ensure that you appropriately plan for Medicaid long-term care eligibility without having to spend all your money. Like many other seniors, you've probably worked hard your entire life to accumulate and tidy your nest-egg.

Reasons Why You Should Plan to Protect Your Assets from Assisted Living Facility

You certainly do not want to lose it all just because of the high costs of long-term care provided in assisted living facilities. This is exactly why you need to have a proper plan for your retirement with a tidy nest-egg to take care of your long-term care needs without eating into your accumulated assets. You should also have long-term care insurance that covers the costs of assisted living, home care, hospice care, nursing home, adult daycare, Alzheimer's facilities, and respite care.

Another important reason why you may want to protect your money from an assisted living facility is to ensure that the protected money can be used to provide better long-term care. Generally, Medicaid can only cover the bare essentials, which is too little if you want to enjoy a quality life in an assisted living facility. For instance, Medicaid can only provide for a shared room in the facility and this may not be helpful if you need extensive care. That being said, setting money aside will be of great importance should you need better or extensive care in the future.

That's not all; most of us will, of course, protect our assets so that we can offer inheritance to our children or relatives. Honestly speaking, proving your children and relatives with inheritance is a great way of leaving a legacy to your children. It would be reckless to have your entire life savings eroded with the costs of long-term care. You should, therefore, protect your assets from nursing homes for the benefit of your children or beneficiaries.

Is It Possible to Give Away Your Assets as a Way of Protection?

Whether or not you are already in an assisted living facility, nobody is going to prevent you from giving your assets as deem right and as long as you've settled your long-term care bills. However, things may look bleak if you decide to apply for Medicaid. If you decide to apply for Medicaid, you'll be subjected to the five-year rule.

This rule will penalize you by looking at any asset transfers made within the last five years, especially to protect your assets from an assisted living facility. For example, you'll not be eligible for Medicaid for a while if you've transferred any asset within the last five years. Generally, the penalty can be shorter or longer than five years. In essence, you're free to give away your assets as you see fit as long as you do not intend to apply for Medicaid soon.

How to Protect Your Money and Assets from Assisted Living Facilities

There are a few ways to protect your assets from a nursing home. If you feel healthy and do not expect to go for long-term care soon, you can consider the following options. 

Gifting Money Away

There are various assets that you can transfer to others as gifts without any penalty. For instance, you can gift your personal effects, household goods, and certain prepaid funeral expenses without penalty. There are instances where you can also gift your home, producing property, and retirement accounts.

You, however, have to keep in mind that these gifts may be subject to gift tax consequences. You should also keep in mind that the five-year look-back rule applies.

Purchase Financial Products

You can choose to purchase insurance policies and annuities that have long-term care insurance options. They're much better than the traditional long-term care insurance thanks to the 2010 Pension Protection Act. 

Get Your Estate Planning in Order

If you do not want to give your assets away, one of the most important things you can do is to have a proper estate planning place. This will ensure that your beneficiaries are protected. For instance, you can have a durable power of attorney to ensure that your assets are protected. The power of attorney can be crucial, especially if the senior is already in a nursing home.

You can create an irrevocable trust so that you do not give away or spend your assets to get long-term care. By doing this, you might qualify for Medicaid but you have to consider the five-year look-back rule. The idea here is that the assets you place in an irrevocable trust are no longer yours.

Of course, you'll have to choose an independent trustee who will run and manage the assets placed in the trust. In other words, you'll not have any control over the trust but may use the assets during your lifetime. Remember, the assets in the irrevocable trust will not count towards your eligibility for Medicaid.

You can choose to create a life estate if you have a family home that you do not want to lose. This means that you have the right as a "life tenant." In other words, you'll have the right to live in the home until your death after which the property can be transferred to your chosen beneficiary.

A life estate gives you the right to remain in control of your home until you die. You'll, however, have to keep a keen eye on any potential tax implication involved. You also have to remember that the 5-year look-back rule applies, especially if the property is sold when you're still alive.