Should it become necessary for one spouse to move to a long term nursing care facility (“Institutionalized Spouse”), the spouse who remains at home (“Community Spouse”) will need to know their rights and planning options. In order to determine the best approach for protecting assets for the Community Spouse and his or her children, it is important to know what assets he or she may keep and which assets must be spent on the care of the Institutionalized Spouse before they can qualify for Medicaid. The allowances for the Community Spouse change annually. The Centers for Medicare and Medicaid Services has released its Spousal Impoverishment Standards for 2015.
The official spousal impoverishment allowances for 2015 are as follows (we include Medicaid’s home equity limits):
Minimum Community Spouse Resource Allowance: $23,844 This is the minimum portion of the marital assets the Community Spouse may retain. Even if one-half of the marital assets would be less than $23,844 (2015) the Community Spouse will be able to keep this amount plus his or her “exempt” assets as defined below.
Maximum Community Spouse Resource Allowance: $119,220 This is the maximum portion of the marital assets (not including the “exempt” assets discussed below) that the Community Spouse may retain. Generally, the rule of law states that the Community Spouse may keep the lesser of the following: 1. one-half of the total marital assets, OR 2. $119,220 (for 2015). In addition to the determined amount, the Community Spouse may retain the applicable “exempt” assets, if any.
Maximum Monthly Maintenance Needs Allowance: $2,980.50 This is the maximum portion of the marital income that the Community Spouse may retain without a showing that additional income is necessary for his or her continued well being.
The minimum monthly maintenance needs allowance for the lower 48 states remains $1,966.25 ($2,457.50 for Alaska and $2,261.25 for Hawaii) until July 1, 2015. This is the minimum portion of the marital income that the Community Spouse may retain.
Exempt Assets: Regardless of the rules set out above, certain assets are considered “exempt” from the calculations above. The Community Spouse will be permitted to keep certain other “exempt” assets which are not part of the other calculations. They are as follows: 1. Primary Residence (subject to limits below) 2. Community Spouse Retirement Accounts (ie. IRA, 401k, 403b etc.) 3. One vehicle
Home Equity Limits:
Minimum: $552,000
Maximum: $828,000
Immediate Planning Considerations: 1. When a spouse enters a nursing home, the Community Spouse should immediately consider changing his or her Will and/or Revocable Trust. The Institutionalized spouse should be removed from Executor/Trustee positions. It is likely that the Community Spouse will give thought to removing the Institutionalized Spouse as a beneficiary of a Will, Trust and Retirement Assets. It may be better to direct the assets to children or loved ones or into a special needs trust for the benefit of their spouse in case they pass away before the Institutionalized Spouse. 2. The Community Spouse may consider gifting some portion of the retained and exempt assets after their spouse has qualified for Medicaid. We always suggest the use of Medicaid Asset Protection Trusts as the recipient of larger gift amounts. 3. Update power of attorney documents. The Institutionalized spouse should be removed as Agent under the POA and others should be added. 4. Change beneficiary designations and title to retained or exempt assets. For example, the Institutionalized Spouse should be removed from the deed to the primary residence, from all retirment account and life insurance beneficiary designations and any other retained assets.
Needless to say, there is a lot to consider when your spouse needs nursing home care. There are many important steps that need to be taken to insure that you and your loved ones protect as much of your estate as possible from the ever-rising costs associated with long term nursing home care. Proper and Timely planning can save tens or hundreds of thousands of dollars that would otherwise be lost.
For assistance dealing with developing a comprehensive nursing home asset protection plan in Pennsylvania, please contact Douglas L. Kaune, esquire at 610 933 8069 or email him at dkaune@utbf.com. Doug’s entire practice is focused on elder law, Medicaid Application, estate planning, trust planning, estate administration and protection of clients’ assets from nursing home spending and estate and inheritance taxation. Unruh, Turner, Burke & Frees, P.C. is a full service law firm which has three convenient office locations in Phoenixville, West Chester and Paoli, Pennsylvania. The firm primarily services clients in Chester, Montgomery, Delaware, Philadelphia, Bucks and Berks Counties, but can represent clients throughout Pennsylvania.
