No one, except maybe Jeff Bezos, Elon Musk, and the rest of America’s billionaires, would call 2020 a good year. After all, while the ultra-rich have gotten ultra-richer, the rest of us have been weathering a pandemic and economic downturn of historic proportions. Luckily, as multiple effective vaccines have arrived and a return to some kind of normal life appears to be around the corner, 2021 promises to be better—but only if you’re prepared.
This past year will go down as one of the toughest of our lives because few could have predicted Covid-19 and few were ready. There are things out there that are as bad or worse than the virus, though. They include serious personal injury, unmanageable healthcare costs, irreparable family conflict, unforeseen death, and probate court (yes, that’s a joke… sort of). Each of these risks is well-known, however, and as such, each is easy to prepare for or mitigate. Do this and the next twelve months are sure to be better than the last!
Risk Proof Your Well-Being
Many people mistakenly think that estate planning is all about preparing for your eventual passing. They imagine the process centers on drafting a will, appointing an executor, and, if they’ve read a little deeper, assigning power of attorney duties to loved ones. These are essential tasks, but they are far from the only tasks related to estate planning and they are not the ones that will affect you most directly.
The single most important thing you can do to shield your own well-being against unforeseen calamity is to institute a plan to ensure you have access to affordable long-term care when you need it. This means either purchasing long-term care insurance or shuffling around your assets to ensure you qualify for Medicaid—or both.
If your state provides a long-term care insurance partnership (and Ohio does), you need not worry about rising care costs eating up insurance benefits and then having to spend down your assets so that Medicaid will cover the rest. Instead, the partnership allows you to purchase a qualified insurance policy in the amount needed to cover your assets, and then, should care costs deplete your benefits, you are permitted to qualify for Medicaid while still retaining assets in the amount equal to that covered by your insurance. This means that if you have $200k in assets and you buy $200k worth of insurance, once all benefits are used up you can keep your $200k and still qualify for Medicaid.
Due to costly premiums, long-term care insurance is not the best option for everyone, though, especially those with less than $200k to their name. Folks in this position might be better served by rearranging their wealth to ensure they qualify for Medicaid from the start. Unfortunately, this is easier said than done. In 2020, a single individual who seeks Medicaid coverage can have no more than $2,349 of monthly income and no more than $2,000 in countable assets. Many people who need coverage have significantly more than this and yet with a little bit of foresight and strategic planning, these cut-offs are more than attainable.
The details of how best to redistribute assets in order to qualify for Medicaid are beyond the present article but include such moves as gifting assets that you already planned to gift, transferring funds to an annuity, transferring income to a spouse, and protecting wealth with an irrevocable trust, among other legal strategies. Regardless of which you choose, time is of the essence as Medicaid employs a five year “look-back” period when assessing applicants to ensure the money that otherwise could have been used to pay wasn’t improperly gifted or liquidated. This means getting started today because as Covid-19 has so rudely demonstrated you never know what tomorrow may bring.
An experienced estate planning attorney is your best resource for ensuring your estate and your well-being are protected. At the Deliberato Law Center, your first consultation is always free as we’re only interested in working with you if we know that we can bring value to your life and peace of mind to your coming years. If estate planning is on your to-do list for 2021, don’t hesitate to reach out.
Contact the Estate Planning Attorneys at Deliberato Law Center