Estate Planning, Probate & Elder Law Tips, Tricks, News, Upcoming Events & More

Protecting Your Assets from Long-Term Care Costs: Five Essential Steps

Aging is an expensive endeavor. While many financial burdens are relieved by reaping the benefits of your peak earning years and seeing children start their own adult lives, many more await just ahead in the form of retirement and long-term care needs. The latter is especially burdensome. In Texas, a private room in a nursing home costs on average $6,388/month; for an assisted living facility, this figure is $3,998/month; and for a home health aide it is $4,195 monthly. Few can meet these costs without wiping out their life savings (and then some). Luckily, with a little bit of foresight and planning, this isn’t necessary.

Five Essential Steps to Protecting Your Assets

  1. Give Gifts While You’re Healthy

Waiting too long to give financial gifts can be a costly error. By passing assets on to loved ones before you fall ill or pass away, you ensure no one’s inheritance is eaten up by creditors. If you anticipate needing Medicaid to cover the cost of long-term care, making gifts early is doubly important as any assets transferred within the five years prior to entering a care facility may be seized by Medicaid when you die.

  1. Transfer Liquid Funds to an Annuity

By transferring funds that might push you beyond the asset limits of Medicaid or other benefit programs, you protect both your wealth and your health. When investing in an annuity, it is important to talk to an experienced estate planning attorney as Texas legislation concerning annuity payouts and public benefit eligibility is complex.

  1. Protect Assets Using an Irrevocable Trust

Assets placed in an irrevocable living trust are beyond the reach of creditors and the prying eyes of Medicaid. By naming a loved one the beneficiary of the trust, you not only secure their inheritance but benefit from the possibility of placing stipulations on how and when the money will be distributed. Meanwhile, any periodic interest or dividends you receive from the trust are safe from would-be collectors.

  1. Consider a “Pour Over” Trust If You Are Married

By placing both your spouse’s and your assets in a pour over trust, you secure both of your financial protection. A pour over trust works in conjunction with a testamentary trust to ensure that should either of you die, assets that might otherwise be seized to cover nursing home care are safe. Upon a member of the married couple’s death, assets are poured into the surviving spouse’s estate via the testamentary trust where they are protected from seizure.

  1. Make a Monthly Income Transfer to Your Spouse

Nursing home Medicaid eligibility includes a Minimum Monthly Maintenance Needs Allowance (MMMNA) which allows an applicant to transfer to their spouse a portion of their income without incurring any penalty. In 2021 this amount is limited to $3,259.50 per month.

Naturally, it is important to seek expert advice before taking any of the steps just outlined. Not only is this because each involves legal complexity but because those discussed represent only a portion of the options available for long-term care planning. An experienced estate planning attorney can walk you through the pros of cons of different strategies and help you determine which best suits your unique situation.

If you are ready to build a long-term care plan, do not hesitate to reach out to The Law Firm of Blanche D. Smith either by calling (936) 301-0111 or using the contact form on our website,

Monique Hineline

Smith & Smith are very professional, informative, and relatable with examples and stories to ease the estate planning process. I had the best time at their lunch and learn. Even if you already have your estate planning in place I highly recommend attending a lunch and learn. Thanks Smith & Smith!