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What if a surviving spouse needs residential care?

When creating an estate plan, most Tennessee residents focus on providing for their loved ones. In the case of couples, the estate planning approach is usually to leave the bulk of one's assets to the surviving spouse, with the intention that the spouse will distribute assets to shared children when the time comes. This approach, however, fails to address the specific needs of a surviving spouse who might eventually require residential medical care.

The cost of nursing home care or residential rehabilitation is astounding, and most Americans cannot afford to cover the cost of such long-term needs on their own. Many rely upon Medicaid to assist with the financial burden that accompanies residential care. However, there are a number of rules in place that dictate when an individual is eligible for Medicare coverage. A big part of that process involves the requirement that an individual or family "spend down" their own assets before Medicaid coverage kicks in. This can leave a family with little option other than to sell assets in order to pay for residential care, leaving little left for any form of inheritance.

One way to protect assets against loss due to medical needs is an irrevocable trust. By placing assets such as real estate and other investments into the trust, the individuals who acquired those assets are no longer the owners of that property. The trust itself becomes the owner, and the assets are then passed on to the named beneficiaries. In this way, a couple can preserve the inheritance that they intend to pass on, while also lowering the value of their estate in order to qualify for Medicaid coverage.

This type of estate planning solution can be highly complex, and requires a carefully considered approach. By working with an estate planning attorney, Tennessee residents can rest assured that a plan is constructed that will provide for the needs of both a surviving spouse and any children or grandchildren, all while protecting assets. Each family has a unique set of needs, but there is a solution available for everyone.  

Source:, "Review estate plan often to protect beneficiaries", Carissa Giebel, June 29, 2015

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