Great Lakes Estate Planning uses Medicaid to protect Illinois clients assets

People no longer have to lose all of their assets when they have a major medical crisis or a nursing home need.

June 3, 2004--One of the unfortunate problems of smaller estates is that while an individual is alive his or her estate can be eaten up by a major medical crisis, long term care or nursing home costs. Cancer, stroke, organ replacement can easily destroy an estate in less than one year. If a patient has medical bills or nursing home costs that they can't pay for with income then the assets of the patient will be sold to pay for care before the government will assist. Once the patient is virtually bankrupt the government will take over the costs, said Len Ostrowsky, an Estate Planner with Great Lakes Estate Planning in Oakbrook Terrace, IL.

With proper planning the Life Estate Trust can allow your assets to escape this forced liquidation. There is a 60-month waiting period after the trust is setup before the patient can be eligible, or even legally apply, for government assistance. So the sooner the program is started the sooner this "period of ineligibility" will end. After that the government assistance will take effect as if the patient owns no assets.

To protect your estate immediately from nursing home costs use the Private Annuity Trust. Under this arrangement the client exchanges assets for the Private Annuity Trust which is payable for life. This is not a commercial annuity, the heirs (children/spouse) act as the annuity company. Upon the client's death, there is no value, no interest or estate of the annuitant left in the assets that purchased the annuity and the remaining monies pass to the heirs. There is no gift component that can create a period of ineligibility, and there is no residual amount left after death that Medicaid could claim. The only thing of value that the client retains an interest in is the annuity itself, and that value drops to zero upon the annuitants death with the balance of the estate passing to the heirs.
The Private Annuity is considered to be a transfer for full and adequate consideration, without any remainder value.

One big advantage of a Private Annuity in Medicaid planning is the fact that no look back period is applicable and no period of ineligibility is created. Since the Medicaid applicant's former assets are deemed exchanged for full and adequate consideration, there is no transfer or gift and no countable assets. There is only an income stream.
This is extremely important in those cases where an individual needs institutionalization right away said Mr. Ostrowsky. This urgent need precedes gifting and Life Estate Trust strategies because of the period of ineligibility that those strategies create. The Private Annuity payments themselves are subject to Medicaid claims, but with proper planning in the right cases the Private Annuity payments will consume nothing or only a portion of the original asset value.

One of the most common uses of the Private Annuity in Medicaid planning is the case where an older individual is in poor or rapidly failing health, and faces immediate institutionalization; there isnt enough time to wait out a period of ineligibility in this case. The only solution is to convert assets to an income stream, so there are no countable assets to create an ineligibility period.

Some people are for Medicaid spend-down and others are against it. When an entire family comes to me and asks for help, we help, said Len Ostrowsky.

For more information, contact Great Lakes Estate Planning 866-TRUST-06