Many people in the United States are living longer. For example, half of the infants born in 2007 may live to the ripe old age of 104. However, this extended lifespan does not always translate to the financial means to pay for it, nor does it mean quality of life. It can be frustrating to save for retirement for years and pay off your house only to lose all of what you have to mounting medical bills as you age, and there will be nothing for your heirs.
So, it makes sense that you would want all of the resources possible to preserve your quality of life while still being able to leave a fair inheritance to your children and grandchildren. Planned impoverishment is one way to do that.
Married versus single
Planned impoverishment works for both single people and married couples, although it does benefit married couples more. To give an example, eligible applicants for Medicaid have exempt assets that generally include a community spouse resource allowance and a house if the spouse lives there. So, right off the bat, a married couple is able to keep their house and about half of their nonexempt assets.
In a nutshell, planned impoverishment is the process of planning to become “poor” so you can qualify for government aid while staying in relatively good financial shape. It entails careful asset planning, taking advantage of gifting and trust vehicles, among other options, to still be able to leave something behind for family members. It is not a way of trying to “cheat” the government. You do everything legally and carefully, and you can explore options to minimize estate tax. New Jersey is a pricey state to die in, as it has both estate and inheritance taxes. One way around that, through planned impoverishment, is to transfer from a nursing home in New Jersey to one only miles away in New York.