Protecting Your Parents' Assets From Nursing Home Costs

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Ashley Day Law

For more information about the author, click to view their website: Ashley Day Special Needs & Elder Law

Posted on

Jun 24, 2025

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Alabama - Gulf Coast

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Protecting Your Parents’ Assets From Nursing Home Costs

Nursing home care costs have been rising over time, with many older Americans who require long-term care unable to afford it.

With proper planning, seniors may be able to rely on Medicaid to pay for this care – and still retain some of their assets – by exploring several different strategies.

The aging U.S. population means that more people will likely need nursing home care in the coming decades. Meanwhile, the cost of nursing home care is increasing — and expected to keep increasing.

With the exorbitant cost of nursing home care, many families worry about depleting their loved ones’ life savings to pay for the care they need. Private health insurance does not cover nursing home care, and while long-term care insurance is available to cover nursing home costs, these plans are also expensive and may come up short for long-term stays.

This leaves millions of Americans reliant on Medicaid to pay for nursing home care — a far from perfect solution that usually involves spending down assets to qualify. With proactive Medicaid planning, though, it is possible for someone to qualify for Medicaid and still retain some of their assets. The sooner you start planning, the more options you’ll have for protecting your parents’ assets from nursing home costs.

 

Odds of Needing Long-Term Care Are High

The lifetime likelihood of needing nursing home care is relatively high. About 70 percent of people who turn 65 today will eventually need some type of long-term care, including nursing home care.

About 1.3 million Americans aged 65 and older currently live in nursing homes, and about 40 percent of today’s 65-year-olds will spend some time in a nursing home before the end of their lives.

Women are more likely than men to need long-term care, and the older a person gets, the more likely they are to need it. At the same time, there has been a growing trend of younger adults (those under the age of 65) living in nursing homes, in part due to Medicaid eligibility expansion under the Affordable Care Act. Research shows that this group increased from 10.6 percent of total nursing home residents in 2000 to 16.2 percent in 2017.

Medicaid expansion has led to more people of all ages qualifying for the joint federal and state health insurance program. Intended as the “payer of last resort” when it comes to long-term care, Medicaid has become the primary nursing home insurance for millions of Americans due to the absence of any other public program covering long-term care.

In 2020, around 6 million Medicaid enrollees used the program to pay for long-term support and services. Around one in five enrollees received institutional care, such as care provided at a nursing facility.

After age 65, more than a quarter of adults receive at least 90 days of nursing home care. Thirteen percent of them receive long-term Medicaid-financed nursing home care.

Medicaid typically pays for 100 percent of nursing home costs and may be the only insurance option available for long-term stays. Long-term care insurance can be purchased, but most policies have limits on the maximum daily or monthly benefit amount and the total lifetime benefit, as well as terms and health requirements that may exclude coverage.

A nursing home stay isn’t necessarily permanent. About 15 percent to 20 percent of admissions are for short-term rehabilitation. Among current residents, the average stay is one year and four months. More than half of residents stay for at least 100 days, while 15 percent of older adults spend over two years in a nursing home.

With nursing home costs running $250 to $300 per day in some states, costs can add up quickly. The average nursing home stay of little over a year, or about 485 days, could end up costing upwards of $150,000.

Extrapolate these costs over multiple years, and they are unsustainable for many families.

 

Medicaid Planning Strategies

Whether a nursing home stay lasts months, years, or is permanent, you may have crunched the numbers and determined that Medicaid is the only feasible payment option for a parent’s nursing home care.

This is a “good news, bad news” scenario. The good news is that it’s possible for somebody who doesn’t currently meet Medicaid’s income and asset limits to “spend down” their excess assets to meet limits. The bad news is that these limits are generally only $2,000, which requires significant planning, since the average net worth of Americans is more than $1 million, including nearly $1.8 million for those 65 to 74.

Another upside is that not all a person’s assets count against the limit. A home, for example, is typically exempt. Someone can also own one car without exceeding Medicaid’s asset limits.

Many Medicaid spend down strategies take advantage of workarounds that allow nonexempt assets to be converted to exempt assets, thereby excluding them from Medicaid calculations. But these strategies often involve navigating a tricky five-year “lookback period” where past asset transfers are scrutinized to ensure applicants don’t give away assets to qualify for Medicaid.

Keeping these considerations in mind, there are financial planning strategies that can help to protect a parent’s assets from nursing home costs and a Medicaid spend down.

 

Medicaid-Compliant Annuities (MCAs)

MCAs, a type of single premium immediate annuity, allow countable assets (like cash or investments) to be converted into a stream of income that doesn’t count toward the Medicaid asset limit. The payout structure must be based on life expectancy, and once purchased, the annuity cannot be cashed out or changed; funds in the annuity are no longer accessible as assets.

Annuity income may affect your parents’ eligibility for other needs-based government programs, such as Supplemental Security Income (SSI). In addition, the state Medicaid agency must be the primary beneficiary in case of the annuitant’s death during the annuity period.

 

Medicaid Asset Protection Trusts (MAPTs)

Medicaid-compliant trusts, like MAPTs, hold assets for a set period, after which they transfer to beneficiaries (usually children or other family members).

Assets in the MAPT are no longer considered part of your parents’ estate for Medicaid purposes. They are legally owned by the trust, not your parents, although they may be able to benefit from these assets, such as remaining in a home transferred to a MAPT.

Creating a MAPT triggers a penalty period of Medicaid ineligibility under the lookback period that’s based on the value of assets transferred. A MAPT is therefore most effective when implemented well in advance of potential Medicaid need, often in conjunction with a parent’s estate plan.

 

Promissory Notes

A promissory note is a legal agreement that allows your parents to lend money to someone (e.g., a family member) who agrees to repay the money with interest over time. This converts a lump-sum asset into a stream of income.

Not all states recognize promissory notes for Medicaid planning. In states that do allow them, they may be subject to scrutiny by state Medicaid agencies. The note must clearly outline the repayment terms and the interest rate must be at or above the applicable federal rate (the minimum interest rate the IRS allows for private loans).

Interest income from the loan may be taxed at a lower rate, and the terms can be customized to meet individual needs. For the Medicaid applicant, however, the effectiveness of a promissory note is largely dependent on the borrower’s ability and willingness to repay the loan.

 

Life Estates

A life estate lets your parents transfer ownership of their home to a child or other family member while retaining the right to live there for the rest of their lives. It removes the home’s value from their countable assets for Medicaid purposes and may protect the family home from Medicaid estate recovery, a program that empowers states to recoup Medicaid expenses from the deceased beneficiary’s estate.

Medicaid’s lookback policy applies to life estates, so the transfer must be done well in advance of needing care. Your parents may also lose some control over the property, and there could be tax implications.

 

Other Spend Down Strategies

A spend down strategy might additionally include a parent spending on needs or wants that can both enhance their quality of life and help them qualify for Medicaid.

Paying off debts, making necessary home repairs, purchasing a new car, prepaying funeral expenses, or taking a family vacation are ways to spend down assets and derive an instant benefit.

Gifting assets to loved ones outside of the lookback period can reduce countable assets and fit into a gifting while living strategy, but annual and lifetime gift tax exemptions apply.

If only one spouse needs nursing home care, Medicaid allows the other spouse (the “community spouse”) to retain a certain amount of income and assets.

Because state Medicaid laws and individual nursing home care needs vary, there is no “one-size-fits-all” strategy for protecting a parent’s assets from nursing home costs and a Medicaid spend down. To develop a personalized plan that avoids penalties or disqualification from Medicaid in your state and also maximizes asset protection, consult with Ashley Day.  Phone: 251-277-3377.


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Her published background includes legal education as well as studies in business, health studies, and gerontology.The firm states that Donna Schuyler is a member of the Idaho State Bar Taxation, Probate and Trust Law Section and the Professionalism and Ethics Section. It also identifies her as a past president and current member of the Treasure Valley Estate Planning Council and a board member of Trust and Estate Professionals of Idaho.Planning and Court-Supervised MattersDonna Schuyler Law PLLC identifies living wills, durable powers of attorney for health care, and general durable powers of attorney among its estate planning services. The firm also handles guardianship and conservatorship, which may become relevant when a person can no longer make or communicate certain decisions and existing planning documents are unavailable or insufficient.Probate is another stated practice area. This allows families to discuss how planning during life may connect with estate administration after death.Who May Consider This Firm?Donna Schuyler Law PLLC may be a suitable option for older adults and families seeking an elder-focused estate plan, advice about decision-making authority, guardianship or conservatorship guidance, or help with probate and related family concerns.McCool Law, PLLCPhone: 208-963-8100McCool Law, PLLC describes itself as a Boise elder law firm and identifies elder law, estate planning, probate, wills, trusts, Social Security Disability, Medicare and Medicaid benefit eligibility, guardianship, conservatorship, housing law, and advance directives among its practice areas.Balancing Protection and IndependenceThe firms elder law materials emphasize the importance of balancing protection with an older adults dignity and right to control their own life. McCool Law explains that families may have options ranging from no formal legal intervention to a power of attorney, conservatorship, or guardianship.This graduated approach can be important when a family is concerned about capacity but wants to understand whether a less restrictive option may be sufficient.Estate Planning, Probate, and Benefits IssuesMcCool Law states that estate planning should address retirement, disability, incapacity, health care wishes, financial management, and the distribution of property after death. Its website discusses wills and trusts, including the use of trusts for blended families, people with special needs, younger beneficiaries, and property located outside Idaho.The firm also identifies Medicare and Medicaid benefit eligibility as practice areas. Its Medicare materials note that prior authorization issues and claim denials can create difficult choices for older adults and families. The firm advises clients about available legal options in these situations.House Calls and Local AccessibilityMcCool Laws website states that the firm makes house calls. This may be useful for clients who have mobility limitations, health concerns, or difficulty traveling to an office. Families should confirm current availability, service area, and any fees or conditions associated with an in-home meeting.Who May Consider This Firm?McCool Law may be worth considering for clients seeking a broad elder law practice that includes estate planning, guardianship or conservatorship, probate, benefits concerns, housing law, or the convenience of asking about a house call.How to Choose Among the Three FirmsThe best attorney for one family may not be the best attorney for another. Use the initial call or consultation to determine whether the firm regularly handles the specific matter and whether its approach fits the familys needs.Match the Attorney to the Main Legal NeedConsider beginning with the issue that requires the most immediate attention: Long-term care financing, Medicaid, veterans benefits, or asset preservation Estate planning and incapacity documents Guardianship or conservatorship Probate or trust administration Medicare, Social Security Disability, or housing concerns A complex estate involving trusts, taxes, business interests, or property in several states If several issues overlap, ask which attorney will take the lead and whether the firm can coordinate the entire matter. Why Elder Law Matters in BoiseBoise and Treasure Valley families often coordinate care across hospitals, rehabilitation programs, home care providers, senior living communities, and relatives who may live in other states. A legal plan can establish who has authority to communicate, manage finances, make health care decisions, and respond when a crisis occurs.Local counsel is especially helpful when Idaho-specific laws and benefit rules affect the outcome. People moving to Boise from another state may also need older powers of attorney, health care directives, wills, and trusts reviewed for their current circumstances.Early planning gives families more options. Waiting until a hospitalization, cognitive decline, financial emergency, or care placement may narrow the available choices and increase stress. An elder law consultation can help a family identify priorities before decisions become urgent.How to Get Started Write down the main concern and any deadlines, safety issues, benefit notices, or care transitions. Gather wills, trusts, powers of attorney, advance directives, insurance policies, benefit letters, and court documents. Prepare a basic list of income, assets, debts, real estate, and recurring care expenses. Identify the people currently helping with health care, finances, transportation, housing, and daily support. Contact the firms whose stated focus best matches the situation. Ask what to bring, who should attend, how fees work, and whether urgent action may be required. Compare the firms based on relevant experience, communication, accessibility, scope of service, and comfort level. Do not transfer assets, change ownership, sign unfamiliar documents, or rely on general Medicaid advice without obtaining individualized guidance. Frequently Asked Questions About Elder LawWhen Should Someone Contact an Elder Law Attorney?It is helpful to seek advice before a crisis, particularly when preparing for retirement, reviewing an estate plan, anticipating long-term care, or choosing people to make future decisions. An attorney may also be needed after a diagnosis, hospitalization, benefit denial, suspected exploitation, or loss of decision-making capacity.Is Elder Law Only About Estate Planning?No. Estate planning is an important part of elder law, but the field may also include long-term care planning, Medicaid, veterans benefits, guardianship, conservatorship, probate, disability planning, and other legal concerns connected to aging.Can an Elder Law Attorney Help a Family Avoid Guardianship?Depending on the circumstances, advance planning tools such as powers of attorney, health care directives, and trusts may reduce the likelihood that a court proceeding will be needed. These documents must be prepared while the person has the required legal capacity. No document can guarantee that guardianship or conservatorship will never become necessary.What Should a Family Bring to the First Meeting?Bring available legal documents, financial and property information, insurance policies, benefit notices, medical or care information relevant to the legal issue, and a written list of questions. Ask the firm in advance whether it requires additional forms or records.How Much Does an Elder Law Attorney Cost?Fees depend on the firm and the type and complexity of the matter. Some work may be offered for a fixed fee, while contested, court-supervised, or ongoing matters may be billed hourly. Request a written explanation of fees and the scope of representation before proceeding.Related Seniors Blue Book Categories Estate Planning in Boise, ID Medicaid Planning in Boise, ID

Local Services By This Author

Ashley Day Law

Elder Law 8335 Gayfer Road Extension, Fairhope, Alabama, 36532

Elder Law - Plan to provide for future needs and preserve your legacy.Planning for the future and ensuring that your wishes will be carried out doesnt have to keep you up at night. If you or your loved one is 60+, now is a good time to plan your legal strategies to receive care in your home as you desire and if you may need expensive long-term care. If you have plans in place, we will review them with you and suggest modifications or additions, if any, for you to accomplish your goals.Elder law and estate planning serve two different, but equally vital, functions. The main difference is that elder law is focused on ensuring your care and preserving your assets during your lifetime, while estate planning concentrates on what happens to your assets after you die.Elder law planning is concerned with ensuring that seniors live long, healthy, and financially secure lives. It usually involves anticipating future medical needs, including long-term care. Elder law services include planning for the expected and the unexpected: pre-need planning and crisis planning. Planning is tailored to each clients concerns, goals, family dynamics, and immediate or potential future care needs and may include planning tools such as:Advance Directive for Health Care (Living Will)Healthcare Power of Attorney with Healthcare PreferencesDurable Power of Attorney for Property with Expanded PowersLong-Term Care Sensitive WillsCertification as to Validity of Power of Attorney and Agents AuthoritySpecial Needs Trusts or Other Asset Protection TrustsMedicaid and SSI PlanningLong Term Care PlanningGuardianships and ConservatorshipsUnderstanding/Protecting Against Elder Abuse and NeglectElder law planning also includes your instructions about living arrangements and priorities when it comes to care, which benefits your entire family. Whats more, it can ensure that you are protected from elder abuse or exploitation when you get older or become incapacitated. For seniors, this means resting assured that you will not be a burden to your children, siblings, or other family members if/when you are not able to care for yourselves. For other family members, your planning manifests your love for them, providing peace of mind and the tools needed to ensure care is provided as planned.Finally, elder law covers assistance with guardianship and conservatorship, if needed. Guardianship and/or conservatorship may be necessary to protect and provide for individuals who are unable to care for themselves or live independently, who are unable to understand or manage money and assets, and who may be at risk of abuse and exploitation. Supported Decision Making may be an alternative to guardianship/conservatorship for individuals with limited abilities to retain their decision-making capacity by choosing supporters to help them make choices.When planning proactively, Ashley Day Law works with you to determine your priorities and what future needs must be met and put together the best course of action based on your income and assets to protect your quality of life and reduce unnecessary stress within the family.When crisis planning, our caring and comprehensive approach can help guide you through a difficult process and relieve you of some of your worries.Having to place a loved one in a skilled nursing facility can be an emotionally wrenching experience. To make matters worse, confusion often reigns supreme when determining how to best use income and assets and when navigating the Medicaid application process. Well-meaning family, friends, and even professional advisers may give conflicting or incomplete advice causing families needlessly to lose their property and assets. At Ashley Day Law, we will help you plan for future care needs and how to pay for them, prepare documents for you to enact your plan, and assist with the administration to ensure plans are implemented and assets distributed as instructed.You want to do what is best for the people you love throughout your lifetime and ensure they are taken care of after you are gone. Give us a call.

Ashley Day Law

Special Needs Trusts 8335 Gayfer Road Extension, Fairhope, Alabama, 36532

SPECIAL NEEDS PLANNINGParents of children with special needs often worry about how their children would survive and be cared for when their parents are no longer alive to support them.  If one of your loved ones is living with a disability, you make sure that all their needs are met daily.  But what would happen if you were gone?Also, over the years, parents are required to make many decisions in their childrens best interests, and those decisions are only amplified for parents with special needs children. Often, parents of special needs children dont know what questions to ask and are unaware of the many questions that inevitably will come their way. For the greatest success in securing your childrens futures, its important for parents and other family members to be prepared before its too late. Thats the role of special needs planning.Special Needs Planning involves preparing for the current and future care needs of children and adults with intellectual and/or developmental disabilities, neurocognitive disorders, and/or psychiatric illnesses. It is the best way for a parent, grandparent, and/or guardian to proactively protect and provide for children and grandchildren with disabilities both in the near and not-so-near future for care, housing, and quality of life should something unexpectedly happen to you; for 18th birthdays (automatic transfer of parental rights); for eligibility for government benefits; for change in life circumstances; planning for your childs quality of life, and for your peace of mind.Our special needs planning services include:Special (Supplemental) Needs TrustsRevocable Living Trusts with Special (Supplemental) Needs Trust ProvisionsWills with Special Needs & Spousal Trust ProvisionsGuardianships and ConservatorshipsPlanning for Age 18Planning for Eligibility for Government Benefits (SSI, Medicaid, etc.)Government Benefits AdvisementSchool Law/AdvocacyGuardianship/Conservatorship AdministrationSpecial (Supplemental) Needs Trust AdministrationSpecial needs planning is critical because individuals with special needs often are unable to make appropriate financial decisions for themselves and/or are at risk of financial exploitation by others. Equally important is to maintain eligibility for public benefits such as Supplemental Security Income (SSI) and Medicaid and enable children with special needs to have fulfilling lives.SSI is used to pay for food and housing (primary needs), but it is not nearly enough to live on. Medicaid waiver programs enable access to beneficial services and programs not accessible absent Medicaid eligibility. Generally, beneficiaries of SSI or Medicaid can have little income and, at most, $2,000 in assets. Leaving money to loved ones directly to provide for their care would jeopardize their ability to receive any help from these means-tested government programs. On top of that, the money left to them would have to be spent down to pay for primary needs previously covered by SSI instead of being used to improve the care provided and quality of life. A Special (Supplemental) Needs Trust (SNT) manages resources while also maintaining the beneficiarys eligibility for public assistance benefits.For most families, a third-party irrevocable Special SNT is the most effective way to set aside assets and funds to help the person with special needs. Cash, investment accounts, real estate, or proceeds from a life insurance policy are common ways to fund the trust. The trust can provide for the beneficiary during the parents lifetimes and will provide for the beneficiary when parents are no longer around to care for the beneficiary. Because the SNT owns the assets instead of the beneficiary, the assets are excluded from asset limit tests for SSI or Medicaid. Meanwhile, trust funds can be used to pay for quality-of-life improvements for the beneficiary, such as a phone, an iPad, computer games, trips, travel to visit family, entertainment events, and other activities. The SNT also ensures that funds are used for the benefit of your vulnerable family member and that other relatives, such as siblings, are not left with the responsibility and costs of care.Special needs planning can be a complex and confusing area of the law. Ashley Day Law, LLC will work with you to construct a comprehensive plan customized to your situation and provide you with the tools and information necessary to make sure your loved one is protected, so you have peace of mind knowing your loved one will be taken care of just as you wish.How well you do or dont plan for a special needs family member can have tremendous consequences. Give us a call. Let us help you get it right.

Ashley Day Law

Estate Planning 8335 Gayfer Road Extension, Fairhope, Alabama, 36532

Estate Planning - Ashley Day Law provides comprehensive planning ot individuals and families.We help our clients prepare for unexpected incapacity or death, to ensure both that their family and loved ones have the ability to care for them and that their assets are transferred at their passing in accordance with their goals and wishes. We design and create proper estate plans for our clients, review beneficiary designations, and advise our clients to ensure trusts are funded.Establishing your estate plan is one of the most important steps you can take to protect yourself and your loved ones during your lifetime, in case of disability, and at your death. A well-thought-out and comprehensive estate plan can prevent the need for someone to obtain guardianship in the future, lessen administrative costs associated with the transfer of assets at death, and help smooth familial relations.Our estate planning services include:Forming Living, Irrevocable Protection TrustsAssisting with Beneficiary Designations and Other Non-Probate TransfersDrafting Wills, Living Trusts, Healthcare Directives, Powers of Attorney, and Other Planning DocumentsAdvising Executors, Administrators, Trustees, and GuardiansDeveloping Caregiver Agreements and Other Family AgreementsPost-Mortem PlanningWhile estate planning often includes a variety of items among those listed above, foundational estate planning includes, at least, wills, durable powers of attorney, advance healthcare directives, HIPAA authorizations, and a stand-alone or testamentary supplemental needs trust if you have a loved one with special needs. These instruments are critical to ensure your wishes are followed. A properly designed and implemented estate plan also can help you accomplish additional goals, such as:Providing financial security for your familyEnsuring your property is preserved and passed on to your beneficiariesAvoiding disputes among family members, business owners, or with third parties (such as the IRS)Providing for your childrens or grandchildrens educationProviding for your favorite charityMaintaining control over or ensuring the competent management of your property in case of incapacityMinimizing tax consequences and other costsAvoiding probateProviding adequate liquidity for the settlement of your estateTransferring ownership of your business to your beneficiariesPassing on your values, sense of responsibility, and work ethic to heirsEvery family situation is unique. We work with you and your other professional advisors, including financial planners, accountants, and/or other attorneys who are familiar with your goals and concerns to determine what options work best for you and your family and ensure their implementation.By protecting your estate and yourself, you are protecting your family and sparing them the expense, delay, and frustration that occurs when family members fail to plan. No estate plan is one size fits all. As priorities change, plans can be modified. Its never too early or too late to plan. Give us a call. Were here to help.