Long-term care insurance is a specialty type of insurance that helps pay for costs that are typically connected with long-term care. This can include items such as care given in a hospital, nursing home services, medical services provided in your home and treatment for dementia.

WGN’s recent article entitled “10 Crucial Things to Know about Long-Term Care“ looks at these important items.

1. The Biggest Financial Threat. The most significant threat to your financial nest egg is long-term care. About 70% of people over 65 will need some kind of long-term care during their life. The national average for home health care services is $16,743 per month. However, there are ways to manage this without buying a traditional long-term care insurance policy where “you use it or lose it.”
2. Long-Term Care Insurance is Really “Lifestyle” Insurance. It’s NOT nursing home insurance.
3. Reverse Mortgages. These have become a popular and accepted way of paying for expenses, including the cost of long-term care. Reverse mortgages are designed to keep seniors at home longer. A reverse mortgage can pay for in-home care, home repair, home modification and other needs.
4. Using Medicaid to Pay For Long-Term Care. This should be a last resort to pay for long-term care, but it also may be the only way to protect family assets. Medicaid will pay for long-term care, but certain criteria must be satisfied. If you have too many assets, you may not qualify. Talk to an elder law attorney to get qualified amd before applying for Medicaid.
5. Important Considerations When Selecting a Long-Term Care Plan. Four things to consider: (i) go with a company with an AM BEST rating of A+ or better; (ii) the assets of the insurance company should be in the billions; (iii) some long-term care insurers will allow for group discounts through employers, or “affinity” group discounts through a local organization; and (iv) the tax advantages for tax-qualified long-term care insurance plans. At the federal level, premiums for long-term care insurance fall into the “medical expense” category. On the state level, 26 states offer some form of deduction or tax credit for long-term care insurance premiums.
6. The Annuity-Based Long-Term Care & The Pension Protection Act. In 2006, this law was enacted to permit those with annuity contracts to have long-term care riders with special tax advantages. The Act allows the cash value of annuity contracts to be used to pay premiums on long-term care contracts.
7. Asset-Based Long-Term Care Solutions. The best planning approach for those who choose to self-insure is to “invest” some of their legacy assets so the assets can be worth as much as possible whenever they may be needed to pay for care. If unneeded, the money would then pass to the intended heirs, with no “use it or lose it” issues as with conventional long-term care insurance.
8. Long-Term Care Strategy Using IRA Money. Most people use their IRA to supplement retirement. However, sometimes waiting until age 72 when mandatory required minimum distribution rules apply, some people have instead opted to take a portion of their IRA and fund an IRA-based annuity which then systematically funds a 20-pay life insurance plan with long-term care features. This type of IRA-based long-term care policy is unique in the sense that it starts out as an IRA annuity policy, also known as a tax-qualified annuity, and then over a 20-year period makes equal distribution internally to the insurance carrier and funds the life insurance.
9. Important Documents for Long-Term Care Planning. Ask an experienced estate planning attorney about a power of attorney for health care and financial power of attorney, as well as an advance directive or living will.
10. Using Veterans Benefits to Pay For Long-Term Care. The VA offers a special pension: the Aid and Attendance (A&A) Benefit. This is a “pension benefit” and is not dependent upon service-related injuries for compensation.

BOOK A CALL with me, Ted Vicknair, Louisiana Board Certified Estate Planning and Administration Specialist, Louisiana Board Certified Tax Law Specialist, and Louisiana CPA to learn more about estate planning in Louisiana, incapacity planning, and Louisiana asset protection.

If you liked this article, “What Should I Know About Long-Term Care?” read also these additional articles: What Do Seniors Say About Aging in Place? and The Difference between Revocable and Irrevocable Trust and What Is Asset Protection Planning? and Do I Need a Prenup?

Reference: WGN (2022) “10 Crucial Things to Know about Long-Term Care“

A new study published in the Journal of the American Geriatrics Society found that the challenges posed to seniors – many of whom were left sequestered alone in their homes – actually increased the amount of trust they were able to place in themselves and their abilities.

Seasons’s recent article entitled “Pandemic has made seniors more confident about aging in place, study reports” reported on this survey.

In fact, the survey was a part of a larger study, which asked 214 respondents to rate their general self-confidence as well as their confidence in a variety of scenarios—from managing their health to social interactions. This might be confidence in their ability to arrange rides and appointments or seeking support when they need help understanding something.

The researchers from Northwestern University found significant differences between the 66 seniors who responded to the survey before the pandemic and the 148 who answered after.

In fact, pandemic-era respondents not only had higher confidence in general but reported significantly higher confidence in their abilities to manage social interactions.

“Self-doubt is a part of human nature,” the study’s authors wrote. “COVID-19 restrictions forced older adults to experience the loss of in-person human interactions and overcome their self-doubt in managing social interactions. Older adults adapted to the challenges of isolated aging in place and came ahead with higher self-efficacy.”

The news is positive, considering that 77% of older adults want to age in place, according to the AARP. A jump in confidence will be a big help for caregivers who don’t want to see their loved ones institutionalized. Moreover, it opens the door for the necessary planning that will be needed to keep a senior home long-term. This includes installing grab bars and ramps or reconfiguring a two-story house.

Aging in place is good for both seniors and their caregivers. By staying in their homes, older people are able to hold onto more of their independence as they can determine their day-to-day life.

Moving individuals at the end of their life can also have many detrimental effects, including anxiety, depression and loneliness.

For caregivers who are concerned about these aspects, keeping a loved one home can be a big relief with the right support.

BOOK A CALL with me, Ted Vicknair, Louisiana Board Certified Estate Planning and Administration Specialist, Louisiana Board Certified Tax Law Specialist, and Louisiana CPA to learn more about estate planning in Louisiana, incapacity planning, and Louisiana asset protection.

If you liked this article, “What Do Seniors Say About Aging in Place?” read also these additional articles: The Difference between Revocable and Irrevocable Trust and What Is Asset Protection Planning? and Do I Need a Prenup? and Can a 529 Plan Help with Estate Planning?

Reference: Seasons (Aug. 9, 2022) “Pandemic has made seniors more confident about aging in place, study reports”

A Medicaid Planner is a term that encompasses many different types of professionals who may be able to assist you or a loved one with qualifying for Medicaid benefits. Not every Medicaid Planner may be appropriate for your individual needs or situation.

Although Medicaid is a federal program, it is run on a state-by-state basis. This means every state has its own rules and requirements. If you are considering working with a Medicaid Planner, it is important you work with someone who is familiar with your state’s particular requirements to Qualify for Institutional Long-Term Care, which is a needs-based program.

Here is a list of the different types of Medicaid planners:

Elder Law Attorneys — Elder law attorneys are licensed to practice law in a specific state, so they are knowledgeable about their state’s individual Medicaid eligibility requirements. They can help individuals or families protect their assets with a particular type of trust intended to get you qualified. These types of trusts are permitted in Louisiana. If you live in a state other than Louisiana, an elder law attorney can help you explore alternatives to reorganize assets or income so that you can qualify for Medicaid in the future.

Elder law attorneys can also help you appeal a Medicaid denial or adverse Medicaid determination. In addition, where issues become contested with skilled nursing or long-term care facilities, an elder law attorney may be able to help you navigate these issues.

Financial Planners — Financial planners can provide a broad range of advice and planning, but by law they cannot draft legal documents. They can help you put together a long-term care plan, discuss and evaluate investment options, and provide other financial advice. However, not every financial planner understands the intricacies of Medicaid or the particular care requirements that a person may have.

Care Managers — Elder care managers are more focused on care planning and coordination, such as resolving issues you may face if you need community or skilled nursing home care, as opposed to handling financial planning or legal matters. Because they are more familiar with day-to-day care issues, they often can serve as very knowledgeable resources on local programs and alternatives to Medicaid.

Counselors — Medicaid counselors are typically volunteers who offer limited services, like assisting with the application process, at no cost. They usually cannot advise a person on how to qualify for Medicaid. They also cannot provide legal or financial advice.

Insurance Agents and Commission-Based Medicaid Planners — These professionals also have a limited ability to assist with Medicaid planning. Only some products they can sell are Medicaid-compliant. For example, only specific insurance policies, such as prepaid burial insurance and certain annuities, are not “counted” in the Medicaid asset limit applicable in your state. These professionals can help sell you one of these options and will receive commissions paid by the insurance company.
Not every type of Medicaid Planner may be suitable for your situation. For those with significant assets or income, a legal professional combined with a financial professional may make the most sense. Others, whose resources are limited, would benefit by a good medicaid “pre-plan” drafted by an elder law attorney.

For more information on Medicaid planning, BOOK A CALL with me, Ted Vicknair, Louisiana Board Certified Estate Planning and Administration Specialist, Louisiana Board Certified Tax Law Specialist, and Louisiana CPA to learn more about estate planning in Louisiana, incapacity planning, and Louisiana asset protection.

If you liked this article, “Is A Medicaid Planner Right for Me?” read also these additional articles: Alert: Scam Targeting Medicare Recipients and CMS Issues Updated Guidance Intended to Improve Quality of Nursing Home Care and What Happens If Couple Divorce and Own Business? and Can Some Foods Help Prevent Alzheimer’s?

To the estate planning attorney, the situation is known as “crisis planning.” It almost always involves two things happening at once: the immediate need for additional healthcare and for a family’s assets to be protected. The end goal of crisis planning is to protect assets for both spouses, while ensuring that the sick spouse receives the care they need, as explained in the article “Crisis planning for couples focuses on asset protection” from The News-Enterprise.

What is Medicaid Crisis Planning?

Crisis planning for married couples requires a three-step process. First, does the spouse in crisis have the documents in place to allow another person to act on their behalf? This includes a financial power of attorney and a healthcare power of attorney.

Powers of Attorney need to be checked to ensure that they include specific powers needed to take action on the person’s behalf. These documents are “state specific,” meaning each state has laws determining what the POA must contain and how it must be prepared. Crisis planning requires a POA providing a broad set of powers, so agents can access and change documents like deeds, bank and investment accounts.

Once the documents and POAs are in hand, the next step is to get a detailed breakdown of the couple’s financial position and the cost of care. This becomes easier if the couple is organized and has information readily available for each income stream and asset.

What Information Will the Agent Need?

The agent must find several different types of financial documents. Proof of income for each income stream is needed. The actual proof of income will show taxes withdrawn or other deductions taken from income, such as health insurance.

The agent will also need access to several months of statements for each account, including bank statements, investment accounts, retirement accounts and deeds and titles for property. Proof of other assets, including insurance policies, burial plot deeds and other assets must also be included.

Some types of income and assets are countable, and some are non-countable. However, the non-countable income and assets may need to be considered, so the estate planning attorney will need to have all the information.

Medicaid Resource Assessment Request

Step three is to determine eligibility for programs and make the necessary applications. This will depend on the type of care needed. However, a typical crisis case is for nursing home care, which almost always means Medicaid eligibility. All income and assets are reported to Medicaid through a Resource Assessment request. The Medicaid office creates a breakdown of what will be counted against the applicant.

The remaining amount is what must be “spent down” for a person to be eligible for Medicaid coverage.

The most common way to do this is through a Medicaid Annuity. This annuity takes the spend down amount and returns the full amount as income to the spouse at home, effectively preserving the couple’s assets.

Crisis planning is stressful but does not have to be hopeless. By working with an experienced estate planning attorney and providing documentation as quickly as possible, health care needs can be met without the well spouse being impoverished.

BOOK A CALL with me, Ted Vicknair, Louisiana Board Certified Estate Planning and Administration Specialist, Louisiana Board Certified Tax Law Specialist, and Louisiana CPA to learn more about estate planning in Louisiana, incapacity planning, and Louisiana asset protection.

If you liked this article, “Medicaid Crisis Plans for Long Term Care Costs” read also these additional articles: Is Now a Good Time for a Roth Conversion? and What Does a Funeral Cost These Days? and Will Drinking Milk Prevent Dementia? and What are Mistakes to Avoid with Beneficiary Designations?

Reference: The News-Enterprise (July 23, 2022) “Crisis planning for couples focuses on asset protection”

The legal needs of many older Americans go beyond basic legal services. They are also all intertwined. In addition to understanding the legal issues and complications that older Americans face, elder law attorneys must also understand the surrounding personal concerns of their clients, such as health, financial and family issues, and how those affect their clients’ legal issues.

Recently Heard’s article entitled “What You Need to Know About Elder Law” explains that other specific areas of expertise include the following:

• End of life planning could extend to planning your health care support system as you age, signing a general power of attorney, establishing a medical power of attorney and other issues surrounding end of life care.
• Financial issues frequently entails questions about retirement and financial planning, housing financing, income and estate tax planning and gift tax issues.
• Long term care can include planning for asset protection, insurance for in-home care or assistance with activities of daily living, Medicaid long-term care planning, insurance, veterans’ benefits and other issues.
• Residents’ rights issues may include claims or complaints you bring while a patient in a nursing home or long term care facility.
• Workplace discrimination issues stem from the fact that older Americans sometimes face age and disability discrimination in the workplace.
• Interdiction (called Guardianship in states other than Louisiana) issues might include interdiction avoidance, planning wills and trusts, planning for the future of a special needs child, probate court and other issues surrounding minor or adult children.
• Landlord-tenant law may mean handling disputes with landlords, contesting an eviction, dealing with foreclosure issues, rent increases and more.
• Abuse, neglect, and fraud. These elder law attorneys specialize in cases where an older client is being victimized.

An elder law attorney can be a great partner for you as you plan out the legal and financial aspects of the next stage of your life-or the life of a loved one. Speak to one today.

BOOK A CALL with me, Ted Vicknair, Louisiana Board Certified Estate Planning and Administration Specialist, Louisiana Board Certified Tax Law Specialist, and Louisiana CPA to learn more about estate planning in Louisiana, incapacity planning, and Louisiana asset protection.

If you liked this article, “Understanding the Issues of Elder Law” read also these additional articles: What are the Advantages of a Business Trust? and What Is the Best Asset Protection? and What Happens If My Partner Dies and We’re Not Married? and What Does a Blended Family Need to Know about Finances?

Reference: Recently Heard (June 23, 2022) “What You Need to Know About Elder Law”

Medical Xpress’ recent article entitled “How a care program could improve the lives of people with advanced dementia” reports that the Namaste Care program was developed in the U.S., and looks to give comfort and pleasure to those with advanced dementia through engagement and meaningful activity, fun and sensory stimulation, especially through touch and movement.

A feasibility trial of Namaste Care was carried out by Lancaster University in conjunction with clinics across the U.K. who tested its use with people with advanced dementia in nursing care homes in a study funded by the National Institute for Health and Care Research.

Catherine Walshe, Professor of Palliative Care and Co-Director of the International Observatory on End-of-Life Care at Lancaster University, remarked, “People with advanced dementia living in care homes sometimes spend long hours alone in their rooms, and care home staff can find it hard to engage them with the day to day activities in the care home. Namaste Care provides a structured way of engaging with people with advanced dementia, with indications that this increases social engagement and promotes greater calm.”

Namaste Care is operated by the staff already working within the care home and doesn’t require expensive equipment. The program seeks to structure on the “empty time” for residents with advanced dementia, when they’re not engaged in personal care or mealtimes.

The overall goal is to enhance quality of life for residents with advanced dementia. Namaste Care is based around sensory experience: music, massage, color, taste and scents. Some examples include:

• Offering familiar objects from a personal memory box
• Scenting the patient’s room with floral, citrus and wood aromas
• Providing a hand massage, foot spa and a facial with warm flannels to the face and hands
• Varying the volume, tempo and style of music
• Speaking appreciatively and affirmatively to residents
• Reading them familiar texts of poetry; and
• Engaging patients in enjoyable activities, such as blowing bubbles.

As a result of their study published in Health Technology Assessment, the research team developed an illustrated booklet to explain the features of Namaste Care. They also made an animated video.

Aimed at nursing care home staff, this may also be helpful to friends and family to help explain Namaste Care in greater detail.

BOOK A CALL with me, Ted Vicknair, Louisiana Board Certified Estate Planning and Administration Specialist, Louisiana Board Certified Tax Law Specialist, and Louisiana CPA to learn more about estate planning in Louisiana, incapacity planning, and Louisiana asset protection.

If you liked this article, “Can New Program Help Dementia Patients?” read also these additional articles: RMD Formula Changes for First Time in 20 Years and Dynasty Trusts: A Tax-Efficient Way o Pass Wealth Down Through the Generations and What Does An Executor Do? and How to Deal with an Estranged Child in Your Estate Plan

Reference: Medical Xpress (June 14, 2022) “How a care program could improve the lives of people with advanced dementia”

Someone turning 65 has nearly a 7-in-10 chance of needing long-term care in the future, according to the Department of Health and Human Services. However, many people don’t have the savings to manage the cost of assisted living. What they do have is a mortgage-free home — and the equity in it, giving them the potential option of a reverse mortgage to help cover care costs.

MSN’s recent article entitled “A reverse mortgage could be one way to pay for long-term care, but should you do it?” looks at how to evaluate whether a reverse mortgage might be a smart option.

A reverse mortgage is a loan or line of credit on the assessed value of your home. Most reverse mortgages are federally backed Home Equity Conversion Mortgages, or HECMs, which are loans up to a federal limit of $970,800. Homeowners must be 62 years old to apply.

I find that when it comes to long-term care, reverse mortgages are generally NOT a good idea, especially if your goals are to finance long-term care.  If you obtain a reverse mortgage in exchange for cash (the equity in your home), the resulting cash is a “non-exempt asset” that must be used for your care, whereas the home itself is generally an exempt asset (at least on the “front end” when attemting to qualify for Medicaid long-term care).  However, even if the home is exempt on the “front end” it may not be exempt on the “back end” when you pass away due to Medicaid Estate Recovery.  This allows Medicaid to recover what they paid on your behalf for your long-term care up to the value of your home.  Of course, the best option is to protect the home entirely and qualify for Medicaid long-term care, which can be done through advanced planning with an irrevocable trust.  

With that said, if financing long-term care is not your goal, a reverse mortage can be a viable option for achieving other goals (although I discourage my clients from them).  If you have at least 50% to 55% equity in your home, you have a good chance of qualifying for a loan or line of credit for a portion of that equity. The amount depends on your age and the home’s appraised value. Note that you must keep paying taxes and insurance on the home. The loan is repaid when the borrower dies or moves out. If there are two borrowers, the line of credit remains until the second borrower dies or moves out.

If you’re the sole borrower of a reverse mortgage, and you move to a care facility for a year or longer, you’ll be in violation of the loan requirements. Therefore, you’ll have to repay the loan.

Because of the costs, reverse mortgages are also best suited for a circumstance where you plan to stay in your home long-term. They don’t make sense if your home isn’t right for aging in place or if you plan to move in the next three to five years. However, for home health care or paying for a second borrower who’s in a nursing home, this loan can help bridge the gap.

The income is also tax-free, and it doesn’t affect your Social Security or Medicare benefits.

Reverse mortgages are expensive. The costs are equal to those of a traditional mortgage, 3% to 5% of the home’s appraised value. Interest accrues on any portion you’ve used, so eventually you will owe more than you’ve borrowed. Finally, you’ll leave less to your heirs.

BOOK A CALL with me, Ted Vicknair, Board Certified Estate Planning and Administration Specialist, Board Certified Tax Law Specialist, and CPA to learn more about estate planning, incapacity planning, and asset protection.

If you liked this article, “Should a Reverse Mortgage Be Used for Long-Term Care?” read also these additional articles: Did Actor Ray Liotta Have an Estate Plan? and What Is Congress Doing to Guarantee a COLA Increase for Vets? and How Do I Store Estate Planning Documents? and Are Vitamin D and Dementia Connected?

Reference: MSN (June 13, 2022) “A reverse mortgage could be one way to pay for long-term care, but should you do it?”

Long-term care involves not only a loss of personal autonomy; it also comes at a tremendous financial price. Proper planning can help your family prepare for the financial toll and protect assets for future generations.

Long-term care can be very expensive, especially around-the-clock nursing home care. Most people end up paying for nursing home care out of their savings until they run out, at which point they can qualify for Medicaid to pick up the cost.  Many people have the mistaken belief that MediCARE will pay for permanent long term care.  But this not trust.  MediCARE will pay for only 100 days of care, after which, if you don’t have long term care insurance, you will have to use your income or assets to pay.  That is why planning to qualify for MediCAID is a wise decision.

Medicaid rules require that recipients have no more than $2,000 in “countable” assets and limited income. Any excess assets need to be spent down before you can qualify for Medicaid. In addition, in order to be eligible for Medicaid, you cannot have recently transferred assets. If you transfer assets within five years of applying for Medicaid, you may be subject to a penalty period during which you cannot receive benefits. After you die, Medicaid also has the right to recover from your estate, which in the case of a Medicaid recipient usually means only the house.

Careful planning in advance can help protect your estate for your spouse or children. If you make a plan before you need long-term care, you may have the luxury of distributing or protecting your assets in advance. This way, when you do need long-term care, you will quickly qualify for Medicaid benefits. The following are some tools that can be used in an estate plan to prepare for Medicaid:

• Trusts. One of most important estate planning tools you can use is an “irrevocable” trust — the beneficiaries of which cannot be changed after it has been created. In most cases, this type of trust is drafted so that the income is payable to you (the person establishing the trust, called the “grantor”) for life, and the principal cannot be applied to benefit you or your spouse. At your death the principal is paid to your heirs. This way, the funds in the trust are protected and you can use the income for your living expenses. For Medicaid purposes, the principal in such trusts is not counted as a resource, provided the trustee cannot pay it to you or your spouse for either of your benefits. However, if you do move to a nursing home, the trust income will have to go to the nursing home. And to avoid Medicaid’s “look-back period,” the trust must be funded at least five years before applying for benefits. For more information on how to use a trust in Medicaid planning, click here.
• Annuities. Annuities are another tool married couples can use to prepare for Medicaid. An immediate annuity, in its simplest form, is a contract with an insurance company under which the policyholder pays a certain lump sum of money to the insurer and the insurer sends the policyholder a monthly check for the rest of his or her life. In most states the purchase of an annuity is not considered to be a transfer for purposes of eligibility for Medicaid, but is instead the purchase of an investment. It transforms otherwise countable assets into a non-countable income stream. As long as the income is in the name of the spouse who is not in the nursing home, it’s considered non-countable. For single individuals, annuities are less useful, but if you transfer assets, you may be able to use an annuity to pay for long-term care during the Medicaid penalty period that results from the transfer.
• Protecting your home. After a Medicaid recipient dies, the state must attempt to recoup from his or her estate whatever benefits it paid for the recipient’s care. This is called “estate recovery.” For most Medicaid recipients, their house is the only asset available, but there are steps you can take to protect your home. Putting your house in a trust can be a good option, but once a house is placed in an irrevocable trust, you cannot remove it. Another option is a life estate, which is a form of joint ownership of property between two or more people. They each have an ownership interest in the property, but for different periods of time. The person holding the life estate possesses the property currently and for the rest of his or her life. The other owner has a current ownership interest but cannot take possession until the end of the life estate, which occurs at the death of the life estate holder.

Talk to your attorney about whether your estate plan should include preparation for possible Medicaid eligibility.

BOOK A CALL with me, Ted Vicknair, Board Certified Estate Planning and Administration Specialist, Board Certified Tax Law Specialist, and CPA to learn more about estate planning, incapacity planning, and asset protection.

If you liked this article, “Using Estate Planning to Prepare for Medicaid” read also these additional articles: What Is a TOD Beneficiary? and Can My Gun Collection Be Part of Estate Plan? and How Do I Pick a Life Insurance Beneficiary? and How Do Estate Plans and Trusts Work?

After a Medicaid recipient dies, the state must attempt to recoup from his or her estate whatever benefits it paid for the recipient’s care. This is called “estate recovery.”  Medicaid estate recovery was the subject of an article by the National Care Planning Council whcih can be found here: Common Strategies to Protect the Home from Medicaid Recovery.  Although some of the strategies in that article do not apply to Louisiana, the article discusses an important topic, such being, that even though your home is “exempt” on the “front end” if you have to go into a nursing home, if Medicaid pays for your care over a substantial period of time (generally about 9 months to a year) and your home is valued more than approximately $80,000 (depending on your Parish of residence), the home can be seized on the “back end” when you pass away.

For most Medicaid recipients, their house is the only asset available, but there are steps you can take to protect your home.

Usufruct
For many people, setting up a “usufruct” is the simplest and most appropriate alternative for protecting the home from estate recovery. A usufruct is a form of joint ownership of property between two or more people. They each have an ownership interest in the property, but for different periods of time. The person holding the usufruct possesses the property currently and for the rest of his or her life. The other owner (the “naked owner”) has a current ownership interest but cannot take possession until the end of the usufruct, which occurs at the death of the person holding the usufruct (the “usufructuary”).

Example: Jane gives a naked ownership interest in her house to her children, Robert and Mary, while retaining a usufruct for life for herself. She carries this out through a simple act of donation.  Thereafter, Jane, the usufructuary holder, has the right to live in the property or rent it out, collecting the rents for herself. On the other hand, she is responsible for the costs of maintenance and taxes on the property. In addition, the property cannot be sold to a third party without the cooperation of Robert and Mary, the naked owners.

When Jane dies, the house will not go through probate, since at her death the ownership will pass automatically to the naked owners, Robert and Mary. Although the property will not be included in Jane’s probate estate, it will be included in her taxable estate. The downside of this is that the property may be subject to estate taxation. The upside is that this can mean a significant reduction in the tax on capital gains when Robert and Mary sell the property because they will receive a “step up” in the property’s basis.

As with a transfer to a trust, if you transfer the deed to your home to your children and retain a usufruct, this can trigger a Medicaid ineligibility period of up to five years.

Usufructs are created simply by executing a deed or act of donation conveying the naked ownership interest to another while retaining a usufurct for life. If the lookback period has run or the penalty period has expired, the State of Louisiana cannot recover against it for any Medicaid expenses that the usufructuary may have incurred.

Trusts
Another method of protecting the home from estate recovery is to transfer it to an irrevocable trust. Trusts provide more flexibility than usufructs but are somewhat more complicated. Once the house is in the irrevocable trust, it cannot be taken out again. Although it can be sold, the proceeds must remain in the trust. This can protect more of the value of the house if it is sold. Further, if properly drafted, the later sale of the home while in this trust might allow the settlor, if he or she had met the residency requirements, to exclude up to $250,000 in taxable gain, an exclusion that would not be available if the owner had transferred the home outside of trust to a non-resident child or other third party before sale.  Furthermore, an irrevocable trust has the added benefit of allowing you to transfer other assets in addition to your house, such as bank accounts and liquid assets, to protect those other assets from Medicaid.

BOOK A CALL with me, Ted Vicknair, Board Certified Estate Planning and Administration Specialist, Board Certified Tax Law Specialist, and CPA to learn more about estate planning, incapacity planning, and asset protection.

If you liked this article, “Protecting Your House from Medicaid Estate Recovery” read also these additional articles: How Do I Plan for Taxes after Death? and How to Find a Great Estate Planning Attorney and What Happens Financially when a Spouse Dies? and What the Latest Dementia Study Says about Links with Certain Medicines

MedScape’s recent article entitled “More Evidence Dementia Not Linked to PPI Use in Older People” reports that among nearly 19,000 people, no link was found between the use of proton pump inhibitors (PPIs) or histamine H2 receptor antagonists (H2Ras) and a greater likelihood of incident dementia, Alzheimer’s disease, or cognitive decline in people older than 65 years.

“We found that baseline PPI or H2RA use in older adults was not associated with dementia, with mild cognitive impairment, or declines in cognitive scores over time,” said lead author Raaj Shishir Mehta, MD, a gastroenterology fellow at Massachusetts General Hospital in Boston.

“While deprescribing efforts are important, especially when medications are not indicated, these data provide reassurance about the cognitive impacts of long-term use of PPIs in older adults,” he added.

As PPI use has increased worldwide, so too have concerns over the adverse effects from their long-term use, Mehta said.

“One particular area of concern, especially among older adults, is the link between long-term PPI use and risk for dementia,” he said.

Behind the controversy was a February 2016 study published in JAMA Neurology that showed a positive connection between PPI use and dementia in residents of Germany aged 75 years and older.

The researchers linked PPI use to a 44% increased risk of dementia a five-year period.

This study was based on claims data, which can introduce “inaccuracy or bias in defining dementia cases,” Dr. Mehta said. He commented that it and other previous studies also were limited by an inability to account for concomitant medications or comorbidities.

To overcome these limitations in their study, Dr. Mehta and colleagues examined medication data collected during in-person visits and asked experts to confirm dementia outcomes.

The research data come from ASPREE, a large aspirin study of 18,846 people 65+ in the United States and Australia. Participants were enrolled from 2010 to 2014, and a total of 566 people developed incident dementia during follow-up.

The researchers had data on alcohol consumption and other lifestyle factors, along with data on comorbidities, hospitalizations and overall well-being.

BOOK A CALL with me, Ted Vicknair, Board Certified Estate Planning and Administration Specialist, Board Certified Tax Law Specialist, and CPA to learn more about estate planning, incapacity planning, and asset protection.

If you liked this article, “What the Latest Dementia Study Says about Links with Certain Medicines” read also these additional articles: What Fruit Is Best for My Heart? and How to Get Into a Nursing Home as a Medicaid Recipient and What are the Most Important Estate Planning Documents for Seniors? and Can My Hands Tell Me about Liver Problems?

Reference: MedScape (May 24, 2022) “More Evidence Dementia Not Linked to PPI Use in Older People”