[From Mr. Marsocci’s book The Long Term Care Solution].
The snapshot date is simply the date that the person entered the nursing home, and therefore is “locked in” to how their assets were arranged at that time. More specifically, it is the first day of the first month in which the person enters the nursing home and is not likely to come out. This is one of the reasons why it is so critical to get a good Care Assistance Game Plan in place before someone actually is in the nursing home and facing a giant financial burden. This is particularly true when a couple is involved because it can greatly affect how much in assets and income can be diverted to the spouse. Here’s an Example:
Rory needs nursing home care and his wife Amy is trying to rearrange his assets to help. If Rory enters the nursing home on April 1 and Amy starts looking at their assets on April 3, they look like this:
- House worth $500,000
- Rory has IRAs, stocks, and cash worth $100,000
- Rory has income of $2,000 per month
- Amy has IRAs, stocks, and cash worth $50,000
- Amy has income of $700 per month
Based on these facts, Amy gets some help with putting together their finances and eventually qualifying Rory for Medicaid. In the end with a good Care Assistance Plan, Amy gets to keep about $75,000, she gets to keep the house with some repairs and upgrades, gets all burial and funeral expenses pre-arranged and paid for, and managed to get income of $2,500 per month to Amy. The downside is that she had to spend about $20,000 on Rory’s care before Medicaid took over, and Amy does not get to have the maximum “Community Spouse Resource Allowance” of about $110,000.
Now let’s take a look at the same facts but Amy starts planning a few months before Rory actually has to go into a nursing home. By shifting assets around prior to the snapshot date and using a simple revocable living trust on a temporary basis, the full $110,000 can be kept by Amy on the Snapshot Date, still take all of the same other spend down steps, but now Amy and Rory didn’t have to spend down anything on Rory’s care and still get all of the other benefits to Amy. In the end, Amy and Rory came out $55,000 ahead simply by planning two months out.
How is this possible? Why is it this way? It’s because North Carolina and a lot of other states will allow the spouse outside the nursing home, frequently called the “community spouse”, to have UP TO about $110,000 of assets, but it is not done by simply transferring the assets to the community spouse. (In some states, they can). It’s done by taking the whole of the cash assets, dividing by two, and seeing how much the community spouse and the spouse in the nursing home get to keep. Again, a good but simple technique using a simple revocable living trust in conjunction with timing the snapshot date made a world of difference. Or at least a $55,000 difference.
Jeffrey G. Marsocci’s book The Long Term Solution is available at www.TheEstateGeek.com, or a full Care Assistance Packet can be found at www.CareAssistanceCenter.com/CarePacket