If you are a senior citizen or are a person who is taking care of an elderly person, you may find that living expenses are quite high. With an elderly person, you may be required to pay fees for a nursing facility or an assisted living establishment. Those fees could be required if the elderly person is sick and still living at home. For instance, the average cost of living in a retirement home could reach an alarming $300 per day. Depending on where the home is stationed, the cost could be a lot higher than that per day. Every day, the costs for seniors are increasing and the need for more help for seniors are becoming more apparent. That is why programs like Medicare and Medicaid were set in place. These programs aim at helping elderly individuals with living costs.
Medicare and Medicaid
Medicare is the health program that is for individuals who are 65 years old or older. It covers the costs of medical bills when a person is in a nursing facility for a short period of time. If the person is in need of long-term medical attention, Medicaid steps in to take over for Medicare. However, in order to be eligible for Medicaid, the individual must have assets that total at least $2,000 or a certain amount according to the individual’s residing state. These assets include some of the following items:
- Bank accounts
- Mutual funds
Because most elderly individuals do not have these assets, they seek other ways to afford the cost of living. As a result, life savings are quickly used up leaving the individual with no other funding for living expenses. This is where it is valuable to establish a trust for the individual.
The Different Trusts and Their Advantages
There are two main types of trusts that can be used for help for seniors. These trusts are called revocable trusts and irrevocable trusts. Below is a brief explanation of both trusts:
· Revocable Trusts
This type of trust can be taken back. This means that Medicaid sees that all assets that are in a revocable trust belong to the individual who had established the trust. If the amount of the trust goes over the value limit of the assets in the trust, the individual will no longer qualify for the benefits of Medicaid and the trust will be revoked.
· Irrevocable Trusts
This type of trust cannot be revoked. The control of the assets in the trust is transferred to a trustee from the person who established the trust. This makes the individual able to qualify for Medicaid. The process may take a while to complete, but rest assured that it will get done eventually. This usually happens because Medicaid has a 5-year period where it is able to determine if any money had been transferred to the trust or given out in the 5 years before the individual applied for Medicaid. This delay, if any is created, is called the penalty period.
The advantages of a trust add even more help for seniors when it comes to providing them with financial help. To start with, establishing a trust of any kind has special legal requirements. Because of this, all money placed in the trust is guaranteed to be safely under legal regards. Establishing a trust can also result in tax savings for the family member who inherits the money from the trust. Ultimately, if you want the best help for seniors, establishing a trust for them or helping them establish a trust for themselves will greatly benefit them.
Choose the Perfect Trustee
Being a senior citizen will subject you to situations where people will try to take advantage of you. They take into consider that the elderly are usually vulnerable people who are constantly looking for help and will utilize any help that is given to them. When you are looking for help for seniors, you must constantly keep in mind that not every has the best interest of the elderly individual at heart. That is why it is important that if you are setting up a trust to help a senior citizen, you must choose the perfect trustee to help guard the elderly individual’s precious and valuable assets. You must be able to trust the trustee with the ability to distribute the funds of the trust properly among family members when that time comes.
When it comes to help for seniors, it is important to help them in all ways that you possibly can, especially when it comes to financial help for seniors. Medicaid allows seniors the financial capabilities to handle their expenses when their life savings are gone. If you cannot trust your trustee, it will be hard to do any business with them.