When it comes to preparing for retirement, some struggle with reconciling the cost of housing and healthcare. Depending on your physical condition, many seniors find themselves weighing the benefits of assisted care against the overall costs. Seniors shouldn’t have to consider giving up their assets in order to get the care they need. There are a number of options you have that can protect the things you love while ensuring you don’t have to live without.


Don’t Forego Your Assets for Assisted Living

One of the plus sides of getting older is you typically accumulate both wealth and knowledge.  You probably have more assets now than when you were a young adult.  Oftentimes, one’s wealth is housed within the assets that have accrued over the years.  Unfortunately, if you or your loved one suddenly become sick and require a nursing home or hospice care, all the assets that you have could suddenly evaporate.  The key to prevent losing all of the assets and wealth is using your knowledge you’ve amassed to make smart decisions ahead of time.  It’s important to be as informed as possible so as to not lose all that you have worked hard for.


Prior to taking any actions, it is important to know these two important facts:

  • Federal law makes it so assisted living residents must have limited assets to qualify for federal assistance (e.g. – Medicaid)
  • There is a five-year “look back” rule – all assets must be transferred five years before needing assisted living care


As a result, the best course of action you should take as you age is to be proactive and take the necessary steps ahead of time. If you foresee the need for assisted living at some point, start planning accordingly.  There is an array of options to take that will help increase your chances of holding onto your assets, and the most recommended ways to hold onto your assets are discussed below:


Take Inventory

The first step in the process of protecting your assets is to take ownership of the assets you have on hand.  Complete an inventory of all your assets and determine which are exempt and non-exempt from federal assistance (i.e. – Medicaid). This will help should you need government assistance.  Generally speaking, the costs that are exempt include: the resident’s homestead, savings for burial expenses, automobile, and up to $2k of personal property.


Transfer Assets 

Transferring assets before you need care can help you protect them in the long run. Once you have identified the assets that are not exempt under Medicaid, you can transfer your assets into an irrevocable trust. This allows the transfer of assets to the care of a trustee.  Once this is done, it prevents the assisted living community or Medicaid from confiscating these since the resident is not the legal owner of these assets.  This transfer is a loophole in the system, but it is still legal.


Take Warning

In protecting your assets, it is important to also keep an eye on what could happen in the future. Homestead property is exempt whether one has put their other assets in a irrevocable trust or not. Once the Medicaid recipient passes away, Medicaid can still sell the house to recoup expenses.  As a result, if one wishes to pass the house to their children or other heirs, consider transferring or selling the homestead to the heirs prior to getting sick.  That said, if any assets are transferred to your family, they must be fair market price or it could be considered fraudulent.


Plan Ahead

Regardless of your decision, the best way to face the possible loss of your assets is to be prepared and plan ahead before sickness or tragedy strikes.  The tips discussed above are completely legal, but the most important thing to remember is that there is a “look-back” window, and as such asset transfers cannot be done at the last minute.  So be smart and plan ahead and you can protect your assets so that once you are well again you can enjoy them.



Learn more about assisted living and other healthcare options at the main Assisted Living page or the main Caregiving page.

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About the Author: Victoria K. Stickley is a copywriter, editor, and senior content manager based in the Dallas area. Her graduate education in counseling and research has helped immensely in her writing as well as the care she provides for her grandparents. She currently provides support and resources to senior care websites as she learns and experiences senior care first-hand.