Using an unfunded personal services contract in Medicaid and nursing home planning

Attorney Robert Hidock: There's been a train coming. I've seen over the last couple of weeks where we were executing personal services contracts but we're not funding them and I'm very happy. It's like when people are getting older, the less percentage of assets we can protect. I've seen people coming to me now as part of pre-planning actually wanting to execute personal service contracts but not fund them.

By executing it early, the only caveat is they have to be giving their loved one care and they're going to get paid at the back end, so we can lock in life expectancy with a personal service contract. My mom or dad does not have to fund the money. They only have to fund it if they go into a skilled nursing facility, but we've protected the assets at a much earlier rate.

Attorney Tom Olsen: That is quite brilliant. One of the tools that we use, Medicaid compliant tools, is a personal services contract to protect Mom and Dad's money from nursing homes and Medicaid and the bottom line is that's just one of the tools in our toolbox, but for that particular tool, the younger Mom or Dad is the more money that can be protected. Stated another way, the older Mom or Dad is the less money that can be protected because it's based on what their life expectancy is.

The point is is that we can do, while Mom or Dad are young, we can do this PSC, personal services contract, now and lock in that larger number. It does not require that money be turned over to the kids. It's just locked in and sitting there when it may be used down the road.

Attorney Robert Hidock: Like I said, the only caveat is they still have to be caring for their mom or dad or their loved one. When we create these personal service contracts, typically, Tom--