Most people will suffer a period of disability prior to death, some for a very short period and some for years. We have no guarantees, so we plan for the worst and hope for the best.
Planning for either temporary or permanent disability starts with having Powers of Attorney which I have covered extensively in a previous article. There are other ways to plan for and ease the strain of being disabled.
One is to purchase a Long Term Care Policy. These have become cost prohibitive for many people, but there is a newer insurance product that can help. One can purchase a life insurance policy with a convertible feature, which converts benefits to long term care benefits, if needed. This decreases the life insurance paid out at the death of the owner/insured, but if the policy is purchased with this in mind, it fills the need to fund at home care which is the intent.
If one is going to utilize nursing home care, legal planning should be part of the financial design. Our office utilizes a MAPT, Medicaid Asset Protection Trust, to protect assets in the event of one becoming a resident in a nursing home. This trust must be complete and funded (assets placed in the trust) five years before the Medicaid application is made. Too often the family is told that assets must be “spent down”, meaning spent on a loved one’s nursing home stay, prior to Medicaid paying the bill. It is not necessary to deplete one’s assets prior to applying successfully for Medicaid payments. Establishing this type of trust preemptively is required for all assets placed within the trust to be protected.
Another method of planning for care during disability is the personal care contract which the person in need of care signs with a family member who will render care, with this being beneficial to both. Sometimes a family member is going to retire early to care for a parent. An asset shift can be successful if assets are exchanged as payment for this family member’s agreement for care. The reason that this contract works is that the state will avoid payment for the nursing home for this period of time and it saves the state money. It is a trade.
Bear in mind that nursing homes in the area charge on average over $8,000 per month. Sitters in the home are also expensive, particularly if you or a loved one needs 24/7 care.
Sometimes practical trades can be made. Something like offering a nursing student or two room and board for care and supervision might work. Careful screening is imperative, but could be a solution for each person involved in the arrangement. Always a well thought out written and notarized contract should be in place specifying the requirements.
We help many people achieve both the level of care needed and preservation of assets. Give us a call at (318) 448-1533. M-Th 8:30a.m – 5:00p.m. Closed Noon – 1:00.
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