The issue is are you going to farm, run your business, work until you retire, only to have your assets sucked up by a nursing home at $70,000 to $100,000 a year? You should think about a plan for your long-term care, including home health care, assisted living, and the nursing home.

The biggest recommendation we make is to purchase long-term care insurance which can help pay the costs of staying in a nursing home. Life insurance policies with long-term care riders are also viable options, and if you don’t need them, your money is still there. If your age or medical situation means that you can’t buy long-term care or life insurance, an estate plan can give you other options.

Gifting assets to your heirs can be a useful planning tool, if done correctly.

Medical Assistance is a public program funded by the state of Minnesota to help nursing home residents fund the cost of their long-term care. The federal program known as Medicaid also contributes to these payments, however, there are very strict rules which can prevent individuals from qualifying. In fact, if one spouse goes into the nursing home, he or she can have only $3,000 in assets ($2,000 in Wisconsin). The spouse living in the community can have only $129,000 in assets (Wisconsin is similar). Having a homestead, one car, or a funeral home plan does not count toward the asset total, although if neither party can live in the home it is available to a nursing home. Income limits are also very strict.

Most people will not qualify for Medicaid, but if you wish to, you have to plan in advance. The Medical Assistance program has what is called a ‘look back period’. This means when you file for Medical Assistance, assets that were transferred for less than fair value up to the previous 5 years will count against your eligibility. Essentially, this means you can’t give your assets away to get Medical Assistance. But with a bit of planning, you can gift away assets to your children as long as you stay out of the nursing home for 5 years after!

Read “How to Lose Your Farm to the Nursing Home Without Really Trying," by Pat Lowther