Wisconsin Nursing Home Care Planning: Long-Term Asset-Protection Strategies

“I’m concerned with long-term care costs. How do I protect my assets from the nursing home in Wisconsin?”

One of the biggest concerns I hear from clients today is how they will pay for long-term care in a nursing home if the need arises. Seniors today are understandably alarmed by the prospect of paying for room and board in a nursing home with assets they’ve worked hard over the years to preserve for their spouses and other loved ones.

If you are concerned with protecting your assets when faced with moving to a nursing home, it is important to partner with a Wisconsin elder law attorney specializing in nursing home planning as early as possible in the process.

Paying out-of-pocket for long-term care in a nursing home is simply not a realistic option for many seniors faced with the immediate need of nursing home care. Unfortunately, Medicare does not generally pay for long-term stays in a nursing home. Monthly rates for nursing home care can range anywhere between $8,000 to $12,000, and many do not consider the need to pay for nursing home care until the need arises.

But are there any long-term estate planning strategies to prepare for the costs of nursing home care?

Long-Term Planning in Wisconsin

Private pay. Where possible, paying privately for room and board in a nursing home facility can be a desirable option. Private pay for long-term care offers the most flexibility and control in choosing a facility, whereas the Wisconsin Medicaid and Community Waiver programs do not generally allow an individual to choose where they receive long-term care. Private pay planning strategies should almost always be done with the assistance of a qualified financial advisor and a Wisconsin elder law attorney.

Long-Term Care Insurance. Long-term care insurance policies can also be an advantageous way to pay for at least a sizable portion of nursing home care. The days of the “Cadillac” long-term insurance policies that pay the entire cost of long-term care services for an unlimited period are long gone. Long-term care policies on the market today do not cover the entire cost of nursing home care. Nevertheless, even policies that cover a significant portion of the necessary care services can help lessen the difference between the individual’s income and cost of care, allowing for more time to enact other asset preservation strategies. Unfortunately, most people do not even consider purchasing a long-term care policy until it is too late. Therefore, it is important to think about purchasing a long-term care policy well in advance of your 65^th birthday.

Wisconsin Irrevocable Medicaid Asset Protection Trusts. Medicaid has a Five-Year “Lookback” Rule, which means that a Medicaid applicant, who is otherwise financially and medically eligible, will receive a time penalty for any “divestments” (i.e., gifts or transfers for less than fair market value) during the five years leading up to the Medicaid application date. Divestments also include transfers to irrevocable trusts.

When used properly, an irrevocable trust can be an effective tool for protecting assets, particularly real estate. Drafted correctly, assets in an irrevocable trust are not countable for purposes of Medicaid eligibility, can avoid the Estate Recovery Program, and can potentially receive a step-up in cost basis when the grantor(s) passes away.

Irrevocable trusts are not an appropriate planning device for everyone. Assets in the trust are no longer “yours”’ but belong to the trust. Therefore, assets in the trust cannot be used for personal expenses and future care needs. In addition, the creation and administration of an irrevocable trust must be done very carefully, considering the risks that the individual will not make it five years before requiring Medicaid (a divestment penalty is assessed on the date the trust is funded), and the risk that the trust was not properly administered during the grantor(s)’ lifetime, possibly making assets “available” for purposes of Medicaid eligibility.

Assistance by a qualified attorney is absolutely vital to the success of an irrevocable trust.

Next Steps

If you have questions or are looking for a Wisconsin elder law attorney to discuss long-term care planning, please reach out to this article’s author Attorney Michael J. Keepman at 262-334-3471 or [email protected], or one of our other Estate Planning attorneys by contacting our office at [email protected] or 262-334-3471.

Our Wisconsin elder law attorneys are based in West Bend, Wisconsin, and frequently provide legal services to clients living in West Bend and the surrounding communities of Slinger, Germantown, Kewaskum, Port Washington, Menomonee Falls, Milwaukee, and throughout Washington County, Sheboygan County, Dodge County, Ozaukee County, Waukesha County, Wisconsin.

Originally published: March 5, 2024.