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Preserving government assistance for aging loved ones

As our parents and others we love grow older, their needs may change dramatically. Without careful planning for the future, even those who saved for a rainy day or who own significant resources may see all that they worked for drained away by the high costs of late-in-life care. To help cushion these costs, the government offers programs like Medicaid to those who qualify, but what if your parent has too high an income or owns too large an estate to use government assistance?

Many aging people fall into this donut hole between having the resources to pay for care out-of-pocket and qualifying for assistance to avoid financial ruin. In order to help some people out of the donut hole, the law allows senior citizens with ongoing medical needs to place assets in a special needs trust. This lowers their individual net worth below the threshold that qualifies them for government assistance.

In your parent's case, you may be able to use a special needs trust to hold their assets while still allowing them many of the comforts that they currently enjoy. For instance, they may choose to place their home into the trust, which is likely, considering the cost of real estate in California, but they may still live in the home. The trust can pay them stipends that cover any number of expenses, as long as those expenses remain justifiable under the law.

Don't wait when it comes to the needs of your aging parent. Now is the time to set up the structure that your parent needs to transition into later life and navigate the complicated issues at hand with ongoing care. A strong estate plan, including a special needs trust, may provide the protections your parent needs while also preserving their independence as much as possible.

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