There are several steps you can take to preserve your estate in the event you need long term nursing home care:

1. Purchase long term care insurance to cover the exigency of long term care. See Chapter Four.
2. Hold on to your exempt assets, especially your home.
3. Convert counted assets into excluded assets. Examples include paying down the mortgage on your home, improving your home or acquiring a more expensive home.
4. Since the 6% income rule does not apply to homesteads, if you go into an nursing home, your home could be rented to family members for a very modest amount. Your family could in turn re-rent the property at the current fair market value rent. This arrangement would prevent all of the rental income from being treated as income eligible for nursing home care payment.
5. Investment real estate could be acquired (even a common tenancy in a family member’s residence would qualify) as long as the 6% income to equity ratio is met.
6. Outright gifts and gifts to an Irrevocable or Testamentary Trust provide the greatest planning opportunity. Outright transfers more than thirty-six (36) months from the month in which application for Medicaid is made, or trusts more than sixty (60) months prior to such date are not counted for purposes of Medicaid eligibility. Use of trusts avoids an outright transfer of assets to family members who may dispose of the assets in a fashion unacceptable to you.
7. Consider monthly gifts in what has come to be known as “serial divestment.” This technique involves monthly gifts in an amount that is less than the average monthly nursing home cost, as determined by state authorities. For example:, if the average monthly nursing home cost is $3,750 (the current national average), a gift of $3,749 results in no disqualification. A gift of $3,750 would result in one month of disqualification. Since each month is a new time period for computing gifts, $3,749 could be gifted each month with no disqualification. Serial divestment depends on two quirks in the law: first, that each month must be treated as a new gifting period, and second, that there be no partial period disqualification for gifts of less than the average monthly nursing home cost. You should consult with an attorney familiar in such matters to determine if serial divestment is available in your state.
8. Purchase an actuarially sound annuity (“ASA”). An ASA is a commercially available or private annuity that does not guarantee period longer than the life expectancy of the applicant.

The Medicaid rules change frequently and vary from state to state. Therefore, any planning strategy must be reviewed in light of current and future law changes. Your strategy will depend on the nature and extent of your assets and your family situation.