More Seniors File for Bankruptcy Amid Limited Long-Term Care Funds

by with No Comment BankruptcyLong-Term Care

Do you have a plan for your retirement that includes long-term care? More seniors than ever are questioning whether they have enough support to live into older age, especially with the risk posed by long-term care costs. Most people know that rooms in a nursing home or at-home care can be extremely expensive, but those same people are not sure where to start with the planning process. They frequently get overwhelmed and confused and decide not to take any action at all.
But failing to include long-term care could lead to serious problems and issues. It could cause some seniors to file bankruptcy after just one major medical event.
A new study completed by the Consumer Bankruptcy Project indicates that seniors report that they are struggling with unmanageable costs of health care and inadequate income to match. A rising number of older Americans are filing for bankruptcy, since long term care costs are one of the leading factors of rising costs in older ages. The rate for seniors aged 65 and over, filing for bankruptcy has more than doubled since 1991, according to researchers. The percentage of elders in the bankruptcy system has also quintupled. Seniors say that the rising cost of health care is a leading reason why they are forced to consider filing for bankruptcy. The median bankruptcy filer reported a negative wealth of higher than $17000. Non-bankrupt counterparts, on the other hand, had around $250,000.
More seniors are covered by low paying Medicaid and more seniors are less likely to pay their own bills. Many companies are phasing out retirement plans, which has corresponded with the significant drop in retirement benefits across the country, putting the elderly at risk.
Combine this with increasing longevity numbers that are also followed with a high chance of having to pay for long term care at some point during retirement and this puts your elderly loved ones at risk for significant consequences and problems when it comes time to pay for health care costs that are unexpected. Even one health care event for an elderly couple could expose the other spouse to significant financial issues.
Hire an estate planning lawyer who is there to answer your questions.
 
 

Case Illustrates Hidden Danger Of Fund Transfers

by with No Comment Asset ProtectionBankruptcyMedicaid

It’s a cautionary tale, and proof that it’s rarely possible to have your cake and eat it, too.
A recent court ruling taught a Virginia woman a harsh lesson about trying, basically, to scam the system. The woman sought to be able to qualify for Medicaid by transferring a large sum of money to her daughter, but then sought to say the money was actually still hers when the daughter declared bankruptcy.

The case was recently summarized on the website elderanswers.com.
“In 2002, Dorothy Stutesman transferred $142,742 to her daughter, Holly Woodworth, so that she would not have assets in her name if she ever needed Medicaid,” the account states. “In April 2010, Ms. Woodworth transferred the money to a trust designed to protect the assets from creditors. The entire corpus of the trust was used to purchase an annuity to benefit Ms. Woodworth. In February 2011, Ms. Woodworth filed for bankruptcy. The bankruptcy trustee sought to void the trust, arguing it was a fraudulent transfer under bankruptcy code. Ms. Woodworth did not dispute that the transfer was fraudulent, but she argued that the property was never part of her estate because she was holding it in trust for her mother.
“The U.S. Bankruptcy Court for the Eastern District of Virginia enters judgment for the bankruptcy trustee, holding that Ms. Woodworth clearly had complete ownership of the funds. According to the court, ‘Ms. Stutesman can’t have it both ways; she can’t part with title for purposes of Medicaid eligibility, and at the same time claim that she retained an equitable title to the asset. To allow this kind of secret reservation of equitable title would be to sanction Medicaid fraud.’ ”
While transferring funds to relatives as part of sound financial planning can be a worthwhile practice, quite obviously it includes some risks that older people need to consider beforehand.

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