Elder Law Report
Elder Law Report
Spousal Protection: Navigating Nursing Home Costs
Facing the possibility that you or your spouse might need nursing home care is daunting enough without the added stress of potential financial ruin. The stark reality—nursing homes cost between $10,000 and $15,000 monthly—means even substantial estates can be rapidly depleted, leaving a healthy spouse vulnerable.
In this deeply informative conversation, Elder Law attorney Greg McIntyre and his colleague Jane Dearwester demolish common misconceptions about spousal protection while revealing powerful strategies to preserve assets. The duo emphasizes that marriage alone doesn't grant financial authority over a spouse's assets—a dangerous assumption many couples make. They detail why a comprehensive general durable power of attorney with specific gifting provisions serves as the essential "linchpin" for any protection plan.
The attorneys explain two game-changing tools most people never hear about: Lady Bird deeds and Medicaid Asset Protection Trusts. Lady Bird deeds offer immediate home protection without Medicaid's five-year look-back period—allowing you to maintain complete control of your property while shielding it from recovery. For broader asset protection, irrevocable trusts create crucial separation between you and your assets while still allowing you to receive income benefits. As Greg explains, "You get the benefits as the lifetime income beneficiary and you get the benefit of the long-term care benefit. It's just a win-win."
With 70% of people over 65 eventually needing long-term care, preparation isn't optional—it's essential. Take the first step toward protecting your spouse and preserving your legacy by scheduling a free consultation at mcelderlawcom/scheduling or calling 1-888-999-6600.
Hi, I'm Greg McIntyre, the Elder Law Guy, here with a special guest, our attorney Jane Dearwester.
Greg McIntyre:Hi there, glad to be here, who is a fireball of estate planning and elder law information as well as does a great job with litigation. Our topic today is how to protect your spouse if you have to go in a nursing home. So for me, jane, it's if I have to go into an assisted living or nursing home facility and I want to make sure that I don't suck up all the assets, I don't spend down all the assets and leave Steph, my wife, destitute.
Jane Dearwester:Right, this is a major concern that we get. Clients are always asking about this. When we're out speaking in the community, when we're out giving seminars in the community, this is probably one of the top three questions I get from people all the time. They want to know what happens. How can I, how can I protect everything? And then I also get people who argue with me and say you have to sell everything you have. It's the only option.
Greg McIntyre:So no, no, no no, if you want to relegate yourself to be a ship with an engine and no rudder and just get bounced around, bounced around by the waves of life, okay, and, and this situation that's going to come upon, 70% of people over 65, 70% of people over 65 are going to need some type of long-term care during their life, either in-home, assisted living or nursing home care. And it ain't cheap. We're talking average 10 to $15,000 a month, but you can spend down even a large estate. We're talking average $10,000 to $15,000 a month, but you can spend down even a large estate. And then you're looking at ah, do I need to sell the house? And if you don't sell the house, they're going to attach a claim to your estate and force to sell the house if you pass away. Not good for spouses and not good for children and not good for you.
Greg McIntyre:So really I like to work with spouses, jane, on protecting the assets together. But also, what if just one needs to go into care? How do we make sure that the healthy spouse, let's say Steph, is going to have a ton of healthy years to live when I wear my body out? Okay, and I need help. And us men check out first anyway.
Jane Dearwester:Usually.
Greg McIntyre:It'll be like a vacation to me. It'll be the first vacation I've had in years, but but I do want to make sure that she's taken care of, of course, and it could be a wife making sure a husband's taken care of. Yeah, and ideally we'd be looking at this together. Yes, but but let's talk about ways. I always start with the fundamentals General durable, power of attorney. The most important linchpin is that one thing you pull and the entire machine falls apart. That's right, or it can hold everything together.
Jane Dearwester:Yes, that really pivotal linchpin thing is the general durable power of attorney Important I'm always preaching this that to come in and just have us do a power of attorney for someone is so quick, easy, relatively inexpensive. And if you don't have it in place, your other option is legal guardianship, which is a lot of court oversight, exponentially more expensive, A lot more money for the attorney.
Greg McIntyre:So, while I'm preaching, don't do it right. No, because I want to make sure you have it in place. Okay, you don't understand how easy it is so easy, but also don't understand how complex it is.
Jane Dearwester:Yeah.
Greg McIntyre:The draft is like 23 pages long and there's a reason, because if it doesn't say it in the document, you don't give that power, and I want to give that 100% power to do what I can do.
Jane Dearwester:Yeah, one of the most important things that's in our powers of attorney and others is that gifting provision that you allow your spouse to gift even to themselves, if your spouse is your agent.
Greg McIntyre:even under the rules and there's special ways to do that. But but when you sit down with me or jane, the question I'm going to have for, really, the grieving wife, the crying wife two out of three times that's who it is it's upset because she just figured out that they're going to lose everything to pay for their husband's long-term care stay, and it's okay. Well, did your husband? Was he thoughtful enough, smart enough to go see Greg and Jane and put in place a general, durable power of attorney ahead of time? If not, we're talking about guardianships and then we're under the watchful eye of the court and we're begging the court, we're petitioning the court to do what we want to do and the court doesn't always agree. And it takes a lot longer, it's more expensive.
Jane Dearwester:And it gives the opportunity for other family members to come in and contest and who's going to be the best guardian and you could end up with a third party attorney basically a stranger.
Greg McIntyre:She's going to pick an attorney that's over your assets and your healthcare, maybe. Yeah Right, I don't want to do that job and nobody wants me to. So pick the person that's right for you, okay, yeah, but Jane, we're married, I can do everything for my spouse. What are? What are these guys talking about?
Jane Dearwester:Yeah, that's a huge, common, very, very common misconception. Married couples think they do not need to have a power of attorney because they make an assumption that, well, we're married, that means we can do anything for each other. And I'm always correcting people no, that's not what that means. Even spouses have to have the power of attorney in place, bruh.
Greg McIntyre:If I become incompetent? Steph is stuck. Stuck, I mean. She can't move any real estate. She can't do any protective deed work if she hasn't done that. She can't put a ladybird deed on the house because I got to sign it Right. She can't refi it, she can't sell it, can't take out a block, she can't take out a loan. Nope, she's stuck with any real estate. We own Individual retirement accounts, by definition, by the name. It's in the name Individual, oh, but I'm the beneficiary. That's cool. I ain't dead yet. You're only a beneficiary, and that only comes into being when somebody dies.
Greg McIntyre:So all these responses and these weird things we tell ourselves we need to snap to reality, which is just because you're married in the eyes of the Lord and the eyes of the state doesn't mean that you have access to your spouse's assets, because you don't, unless your spouse is giving you access through that special document that's well-written and comprehensive a general, durable power of attorney. I'm telling you nine times out of 10, jane, an attorney and an individual, when they're trying to look at the options and draft the general, durable power of attorney, are going to nix and say no way my agent should be able to give to themselves. Horrible idea in a marriage, especially between spouses, when there is potential long-term care issues in the future. That way, you want to be able to transfer freely assets and do whatever we need to do to qualify for a benefit for the person who needs care. If I think I might need care and I really want to protect myself, my spouse and my assets, I'm going to put that in place first and then I'm going to move to the healthcare power of attorney, which I would say would be equally important, because people get stuck there. That's required in a benefits application. Hey, that's one of the first things they're going to ask is where's the healthcare power of attorney? So we need that foundational work in place general, durable power of attorney, healthcare power of attorney.
Greg McIntyre:And then let's talk about asset preservation. It's setup of assets. We get our foundations in place. I'm looking at in a consult for estate planning okay, is there a primary residence or is there other real estate? Primary residence, is there other real estate? How long are the funds? What are the total assets Retirement plus private brokerage accounts plus savings checking, cds, money market, whole life insurance. What are the assets? Is their money stacked high enough that they can take a hit to really self-fund and self-insure for a long-term care stay or is it really in danger of being spent down? And I'm looking at the makeup of the assets the money versus the real estate to tell me whether a ladybird deed is right for the home or we're looking at going into trust and whether we need, or some clients will want, to instantly protect the home with a ladybird deed because it's not affected by the look back period, and we'll talk about what that is and the rest.
Greg McIntyre:We use a trust to do it and we use a special type of trust irrevocable trust, because a revocable living trust no help in long-term care planning at all. I see attorneys and and and individuals who've done long-term care planning at all. I see attorneys and individuals who've done long-term care planning and they're sitting there with these revocable living trusts and, attorney, I already got this all set up. It's a revocable living trust and I'm the trustee Because you have your hand in that cookie jar. You keep your power of appointment legally. That's this key thing. You can revoke it, amend it. You made it, you control it. You're the trustee. You are totally that hand in the cookie jar. They consider it your assets still and collectible assets right the same as in probate. So, jane, a ladybird deed. Let's say, my house is my primary asset. I need to get my powers of attorney and foundational work in place. How would a ladybird deed?
Jane Dearwester:help protect me, my spouse, and pass my asset and free me up for benefits. Yeah, I love the Lady Bird deeds. As you know and others know, my background is in real estate. I did that for about 15 years before I transitioned into elder law and never heard of Lady Bird deeds, never really dealt with them, because it's not really a real estate attorney advice. Really it's. It's an estate planning just like selling a house.
Jane Dearwester:It's like right estate planning or real estate attorneys don't mess around ladybird deed. But I love how easy and powerful the ladybird deed is because because you decide who you want to leave your property to after you pass. You sign the deed now, but during your lifetime you maintain all power and control over your property. You can do anything with it, including selling it. You don't have to get the ultimate beneficiaries or grantees to sign off on anything, but upon your death it immediately passes to those named individuals outside of probate, doesn't affect your long-term care qualification. Medicaid can't come back and try to levy against it. So it is such an incredibly powerful document.
Greg McIntyre:I like to also call it the genius deed because the most genius things are elegant and effective in their simplicity, and that's what it is. Look back period Doesn't matter. The benefits allow it in North Carolina to put a ladybird deed on today and apply for the benefit tomorrow. It's okay.
Greg McIntyre:And it's important again going back to the powers of attorney to have that gifting provision that if you haven't had the Lady Bird deed in place and your spouse has maybe already crossed over that line of competency and you have the gifting provision, you can do the Lady Bird deed then yeah, if I'm a child of someone needing care and I want to protect my spouse, maybe my children too, and I'm a child acting for, to put in place this Lady Bird deed because mommy and daddy didn't do it and didn't think about doing it Right, it's the first thing I'm looking for, to make sure because they're going to ultimately going to ultimately receive that home, which could be considered a gift.
Greg McIntyre:It's arguable in the court, arguable and I've argued it but could be considered a gift, okay. So, but other things, trust let's talk about the trust Jane. Let's talk about, you know, I want to put, I want to create a container that can hold ownership to all my liquid assets, and I'm going to put some real estate in there too. Okay, the Medicaid Asset Protection Trust. Let's talk about that specialized, irrevocable trust. How does it help me protect myself and my spouse, should I need care?
Jane Dearwester:It just gives that arm's length separation, so that those assets, whatever you put in there, are not countable for the spouse who needs care. Right, that's what we're trying to do. But I think where people show resistance is they don't want to let go of that control. They want to have their hand in the cookie jar. They don't want to take it out. They're like I like cookies, I like having my hand here. But it's truly in their best interest to create that separation, that lethal separation.
Greg McIntyre:By gaining protection, I'm relinquishing control to a trusted maybe a trusted child as my trustee. But don't they have a legal fiduciary duty to preserve those assets for my use and benefit for the rest of my life? Jane, absolutely yes. Beneficiary. So if I've got rental properties in that trust, if I've got investments, I still get the dividends, interest and rents, I still get the income during my life. So I still just get all the benefits right, right, I think that's my asset.
Jane Dearwester:I think once people understand how it works it softens the idea of letting go of control. But I think initially people can have some resistance, especially people of a certain era right that are heading toward, you know, uh, their latter years. They can say I don't want to let go of this, I've worked my whole life for this and there is a saying the more you try to maintain control of something, the more it controls you.
Greg McIntyre:Ah, that's a good one. So the tighter we hold on, really control is an illusion, anyway, that's true. What we can do is set it up so you get all the benefits but not the detriments when it comes to obtaining a benefit to pay for long-term care. So you get the benefits as the lifetime income beneficiary and you get the benefit of the long-term care benefit. Okay, so that's just a win-win. So that's just a win-win, and those are really great tools for many people, especially as we age, to really shift to a more protective, contemplative, prepared role. Okay, and I love the Medicaid Asset Protection Trust and the power it has. But, alas, best laid plans, I do my work Got to change title to the assets to the trust.
Jane Dearwester:Yes, don't forget, that's an important step.
Greg McIntyre:Fund, the trust Fund, the trust Fund, the trust, and that's so important that we get it out of your personal name, titled in the name of the trust, accounts real estate. We'll draft the deeds to transfer the title into the trust.
Jane Dearwester:And for the assets we can't put in the trust directly, we need to change those beneficiary designations on other qualified accounts to name the trust as the beneficiary. Also, your life insurance name the trust as the beneficiary, so everything's being funneled into.
Greg McIntyre:Or another discussion I always have with clients, jane is or? So life insurance has three positions within it there's the owner of the policy. There's the insured, whose life is tied to the policy, which doesn't have to be the individual. That's the owner I can take out a life insurance policy on you, Jane, if I want to. And there's the beneficiary. So three positions okay.
Greg McIntyre:The trust can be the owner and in many times we want to contemplate the trust being the owner, especially with whole life policies that have value, you're still the insured and the beneficiary. When a life insurance product is in a trust, the beneficiary becomes the trust beneficiaries and we can reference that specific product and who's the beneficiary in the trust. So that is a really cool thing to do, because the benefits rules limit how much life insurance you can have and the value of it to qualify for the benefit. So we want to be contemplative. I look at, jane. A Medicaid asset protection trust is the best safe I can build for you in North Carolina and we close that door.
Greg McIntyre:The only outlet is this hole for income that's coming out to you and, if you need care, there's alternate lifetime income beneficiaries where that flow of income can switch to the alternates, which might be loved ones, it might be children, so it's not counted as your income to be paid toward a facility and what's called patient monthly liability and the benefit. So it's just your social security pension, non-divertible income. So we want to preserve the income and the assets. And life insurance many times is an asset and we need to pay attention to the value of the life insurance and whether we want that to be owned by the trust. Annuities are life insurance products. Life insurance companies created annuities. Those are life insurance products. The trust can be the owner. You can still be the payee off an annuity, paying out right, you're the lifetime income beneficiary of the trust. So we really want to understand what these different assets are and how you can put them in the safe, okay, so anyway, jane, this has been a great discussion and I appreciate you having it with me today.
Jane Dearwester:There's so much to know, right, there's so much to know.
Greg McIntyre:I think we hit some high points. There's so much nuance as well and additional things that we could talk about all day. Yeah, that's why it's important to sit down with a competent, knowledgeable estate planning and elder law attorney to discuss these things, to protect yourself, your spouse and your family, your children and grandchildren. So you know what we do, jane I know Jane would be happy to do it is we offer a free consultation to sit down and discuss these matters, and you can take advantage of that by calling one of our office numbers. Hey, we have a one number that'll ring all of them, so just call and get us. It's 1-888-999-6600. Or you can schedule directly on our calendars. We open ourselves up. We're very free and open at our firm. We open our calendars up to everyone. Go to mcelderlawcom scheduling and you can schedule directly on mine, jane's or one of our other attorneys' calendars. And Jane, thank you very much. I appreciate you pulling me today and discussing this great topic. Yeah, you have a great day, jane.
Jane Dearwester:You too Thanks.