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Strategic use of Miller Trusts in estate planning

As our population ages, more and more of us are finding the need for long-term care such as that provided by assisted living facilities, home health aides, residential care communities and nursing homes. These types of caregiving, which range from minimal, part-time assistance provided by an in-home provider to full-service nursing home facilities with trained medical staff, can make a huge difference in the quality of life of both patients and their loved ones. The problem, of course, is that long-term care is notoriously expensive. Even lower-tier nursing home and other residential facilities can easily cost upwards of $10,000 per month. That kind of expense can quickly run through a person's entire life savings or leave their family destitute trying to pay for it.

This may come as a surprise to many, but Medicare, the government insurance benefit program used by the elderly, doesn't provide nursing home or long-term residence-based caregiving expenses. Many private health insurance plans also don't have coverage for long-term care. It may be possible to purchase individual long-term care policies, but these are expensive and those costs must be accounted for in advance. Furthermore, policies must be purchased ahead of the time that care is actually needed; most companies won't take on a new policyholder who is about to enter a nursing home or other facility.

Government benefits

In Texas and in many other states, Medicaid benefits may be available to help fund the cost of nursing home care, but there are strict qualification criteria for these benefits, in particular as to income. Medicaid is a need-based program, meaning that people who "make too much" money won't be eligible. Medicaid eligibility is based on monthly income, and is currently not available for people who bring in more than $2,205 per month from whatever source (interest on investments, dividends, disability income, etc.). This very low income rate is purposeful, making sure that funds are available for people who truly need them, but it leaves many people between a rock and a proverbial hard place: they may make too much to qualify for Medicaid, but not enough to privately fund a nursing home.

One way to avoid possibly jeopardizing Medicaid eligibility is to use what is known as a Miller Trust (sometimes called a "Qualified Income Trust"). Miller Trusts are asset protection tools that allow assets and income above the cap amount to be set aside for the use or care of a person without them having direct control over them. This lack of direct control is sufficient to retain eligibility for Medicaid benefits without having to spend down assets that could be needed in the future or left for future generations.

To learn more about how estate planning tools like Miller Trusts or other asset protection strategies can work for you, you should contact an experienced estate planning attorney today. Keep in mind, though, that not all estate planning attorneys are created equal; one with a financial planning or accounting background will be able to understand the complicated tax and economic issues that go into various strategies and can guide you toward the one that is fiscally best for your unique situation.

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