Protecting your assets with estate planning

Making the best of their retirement
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The cost of nursing home and home care have increased exponentially in the last decade, especially since COVID.

Ron Fatoullah knows. His firm, Ronald Fatoullah & Associates, gets calls from individuals that are facing insurmountable long-term care expenses.

“The two most frequent calls we get are from people looking to protect their assets from long-term care expenses and from estate taxes,” he said. “I know it sounds like apples and oranges, and it is to a large extent, but they are sometimes intertwined..”

Typically, Fatoullah’s office will get a call from the spouse or family member of a person who is showing signs of dementia or suffering from other long-term chronic illnesses. “More than fifty percent of individuals over 65 years of age will need some long-term care at some point in their lives,” said Fatoullah, who served for many years as co-chair of the board of the Alzheimer’s Association, Long Island Chapter. 

“They look into care, and they often find out that the care is going to cost $20,000 a month,” he said. “They might have a lot of money in the bank thinking ‘Oh, we have a million dollars in the bank and we’re getting Social Security — we’re secure.’ But they do the numbers and soon find out that’s not true.” 

There’s a five-year “look-back” for nursing home care, meaning that typically, any assets not protected can prevent Medicaid from paying for long-term care. Currently, there’s no look-back for home care, but this likely will change in about a year.

Best case scenario, said Fatoullah, is that his firm gets the call when everyone’s healthy — preferably starting at 55 years old. “We want to protect assets in case of unexpected long-term care, but sometimes we get the call at the last minute and they say ‘Mom is in a nursing home, and it costs $22,000 a month. What are we going to do?’”

In this case, Fatoullah says there are tactics his firm can use. “We try to stop the bleeding and get our clients into a position where we can have Medicaid pick up the service,” he said. “If someone has $1 million or $100,000, whatever it is, those assets can be transferred into a Medicaid Asset Protection Trust and we can get our client financially eligible for Medicaid home care in short order.” 

Fatoullah adds that there are many exceptions in the law. “It’s complicated, and you have to be creative, but there are ways to protect assets, even at the last minute. But to truly maximize your savings and do it the right way, we ask people to plan at least five years in advance of having a long-term care need, but who knows when that will happen. So, the answer is to plan early enough.”

Fatoullah’s firm also handles guardianships, probate, estate planning and advance directives such as Powers of Attorney, health care proxies and living wills. “Some think of us as Trust & Estate attorneys, and some think of us as Medicaid attorneys. The estate tax issue affects many of our clients” he said, adding that the federal estate tax percentage is 40%, and the New York State estate tax can be as high as an additional 16%. Proper estate planning can help our wealthier clients save millions!”

This unearthing of a financial cushion of course makes people’s lives easier — a primary motivation for Fatoullah. “But then they usually come out of our consultation feeling relaxed and relieved. They say ‘Well you know what, I’m finally getting my affairs in order. There are ways to do this. I won’t be impoverished in my later years and my family and I will be taken care of.’ I just feel so good knowing that my firm has helped so many families with the work that we do. It’s extremely satisfying to me.”