When you go through the trouble of creating an estate plan, you do so because you care about your legacy and the people in your life. You want to leave assets for your spouse and your children. Maybe you want to donate to a charity or scholarship fund that means something personal to you.
What you may not realize is that expenses as you near the end of your life could completely consume everything you’ve acquired and set aside for the people that you love. There are two distinct but similar scenarios in which your end-of-life expenses could completely consume your legacy.
When you go into debt for medical care or a nursing home
Medicare does not cover a lot of the intensive support people need in their golden years. You may find that you wind up responsible for significant medical expenses that you will have to pay out-of-pocket.
The amounts that you have not paid when you die will eventually become claims against your estate. Your executor will have to liquidate all of the assets if necessary to repay creditors before they can give anything to your heirs.
When you rely on Medicaid for those final expenses
If Medicare won’t cover you, you may apply for Medicaid. It can pay for nursing home care and other medical expenses that Medicare won’t cover. Since Medicaid is a needs-based program, your finances will be scrutinized before you can be approved.
Any assets left behind when you die are subject to estate recovery programs. The New Jersey Medicaid estate recovery program could even take your home or the proceeds from its sale as a means of recouping the costs it paid on your behalf.
Careful estate planning can avoid these issues, which makes asset protection planning and planning for your future medical needs crucial if you want to leave assets for the people and organizations you care about.