Preparing for Residential Care in Retirement

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Preparing for Residential Care in Retirement

Many people associate estate planning with death and nothing else. However, proper estate planning includes far more than just writing a will. A well-written estate plan should account for all situations in which you cannot make decisions about your assets, including incapacitation due to age or health. 

While it may not be your preferred outcome, it is becoming increasingly common for retired adults to spend at least some time in residential care as the average lifespan increases. In 2019, there were more than 8.3 million adults in residential or long-term care facilities in the U.S., including more than 1.3 million in nursing homes and 800,000 in assisted living facilities. These numbers are expected to rise sharply going forward, too. 

That’s why it’s critical to consider the possibility of entering a nursing home or other facility when drafting your estate plan. Years or decades in the future, you may need full-time support that only a residential facility can provide. It’s better to account for this possibility in your estate plan to keep yourself in control of as much of the process as possible. Here’s what you need to know about estate planning, retirement, and how to integrate the possibility of residential care into your plans for the future. 

The Connection Between Estate Planning and Retirement 

A comprehensive estate plan consists of much more than a last will and testament. It should also have documents such as:

  • Powers of Attorney: These are documents identifying one or more people who have the power to make legal or medical decisions on your behalf if you are incapacitated, such as if you are in a coma or otherwise no longer legally competent.
  • An Advance Health Care Directive: Also known as a living will, this document explains what type of care you want if you are incapacitated and unable to make your own decisions. This can include information such as what type of palliative care or pain management you want, whether you wish to be put on a ventilator, when you would like to be sent to hospice, and more. It can also include a Do Not Resuscitate (DNR) order if you so choose.
  • Trusts: You can use trusts to protect your assets and ensure they are passed on appropriately, particularly if you have not passed on but are no longer living in your home or using other assets. 
  • A letter of intention: This is a document that you leave to your beneficiaries, power of attorney, or executor of your will that explains your goals for your estate overall. While it is not a legal document, it can provide clarity if anything else in your plan is unclear.

How Residential Care Could Alter Your Estate Plans

If you do not plan for residential care, it could completely alter your plans for your estate. For example, if you need to use Medicaid to pay for your nursing home costs, your home and other assets could be at risk of liens. 

The state can place a lien on your homes and other high-value assets if you use Medicaid to pay for your care. After you pass away, the state can pursue the lien to recover some of the money it spent on your care. This may include selling your home, seizing liquid assets, or otherwise taking a significant chunk of your estate. 

You can avoid this problem in several ways. The most effective way is to set aside funds for possible residential healthcare, so Medicaid isn’t necessary. However, you can also shelter your assets if you believe Medicaid will be the most effective way to cover potential residential care. The best path forward depends on your specific needs.  

Integrating Potential Residential Care Into Your Estate Plan 

During the estate planning process, you can incorporate the potential for residential care into your documents. Possible courses of action include:

  • Protecting Your Home: Homes may only be subject to Medicaid liens if they meet specific criteria. In California, that means you can protect your house by selling it to your beneficiaries, placing it in a trust, or making it your spouse’s primary residence. 
  • Setting Up Trusts: Trusts are an excellent way to protect assets in various circumstances. You can set up a revocable trust to cover your expenses should you need residential care. You can also place assets in an irrevocable trust to ensure they are passed down to your beneficiaries, even if you must rely on Medicaid to cover your residential healthcare costs.
  • Writing Living Wills: A living will or Advance Medical Directive can help you choose the type of care you want to receive if you are no longer competent to make your own medical decisions. In your living will, you can explain where you would like to be cared for, what kinds of care you do and do not want to receive, and if or when you would prefer palliative or hospice care.

Prepare for the Future With Expert Legal Counsel

Your estate plan is one of the most valuable gifts you can give your beneficiaries. By planning ahead and including documents that address what to do if you need residential support, you can take the pressure of making these decisions off of your loved ones. However, these documents must be correctly structured to provide the protection and guidance you intend. That is why you should consult with the expert estate planning attorneys at CC LawGroup. Our knowledgeable lawyers understand the complexities of residential care and estate planning. We can help you protect your assets from a nursing home or Medicaid so they go to your intended beneficiaries. Learn more about how we can help with preparing for residential care by scheduling your consultation today.