The Paperwork Starts Immediately. Your Preparation Should Have Started Sooner.
The moment you begin the nursing home admission process, you are entering a world of contracts, disclosures, financial assessments, and decisions that will have lasting legal and financial consequences. Families often arrive at this moment exhausted, overwhelmed, and focused entirely on the logistics of the move itself. The legal piece feels like something that can wait. It cannot.
Whether this transition is planned or the result of a sudden health event, there are specific Estate Planning steps you should take before you sign any admission agreement, transfer any assets, or make any financial decisions on behalf of a loved one. Getting these steps out of order can cost you tens of thousands of dollars, strip you of legal authority you thought you had, and leave your family scrambling to fix problems through the courts.
This post walks you through exactly what you need to address and why each piece matters.
First: Confirm Who Has Legal Authority to Act
Before anything else, you need to know who is legally authorized to make financial and medical decisions for the person moving into the nursing home. This sounds obvious, but it trips up families constantly. Adult children often assume that because they are close to a parent, or because Mom always relied on them, they have the legal right to sign documents and manage finances. They do not, unless that authority has been formally granted in writing.
A Power of Attorney is the document that creates this authority. Specifically, you want a durable Financial Power of Attorney that remains valid even if the person becomes incapacitated. If your loved one does not have one, and they still have the mental capacity to sign one, getting that document executed right now is the single most urgent priority. Do not wait until after admission. Do not assume the nursing home or a doctor can sort it out later.
If your loved one has already lost capacity and there is no Power of Attorney in place, your only option may be to go to court and seek guardianship or conservatorship. That process is expensive, time-consuming, and emotionally draining. It can take months, during which you may have limited ability to manage their finances or make decisions on their behalf. Avoiding that outcome is reason enough to get a Power of Attorney done immediately if there is still a window to do so.
On the medical side, a Medical Power of Attorney (sometimes called a Patient Advocate Designation in Michigan) names someone to make healthcare decisions if the individual cannot make them personally. Pair this with a Healthcare Directive that spells out the person’s wishes regarding life-sustaining treatment, resuscitation, and end-of-life care. Nursing homes will ask about these documents during the admission process. Walking in with them already signed and properly executed puts you in a much stronger position than trying to figure it out in the middle of an intake meeting.
Review Any Existing Estate Plan Before You Make Any Moves
If the person moving into the nursing home already has an Estate Plan, pull it out and review it carefully before you do anything else. This is not a step to skip, even if the documents were done recently. A nursing home admission changes the picture significantly, and what made sense two years ago may not make sense now.
Look at the Will. Who are the named beneficiaries? Who is the Personal Representative (the person responsible for administering the estate)? Are those choices still accurate given the family’s current situation? A Will also does nothing to help you manage assets during someone’s lifetime. It only speaks at death. So while reviewing the Will matters, the more urgent documents are the ones that govern decision-making right now.
If there is a Revocable Living Trust, review who the current Trustee is and who is named as successor Trustee. If the person moving into the facility has been serving as their own Trustee (which is common), there should be a clear mechanism in the Trust document for a successor to step in when that person can no longer manage things. Make sure that mechanism is understood and, if needed, properly activated. Also review whether the Trust is actually funded. A Trust that was never properly funded, meaning the assets were never titled in the Trust’s name, offers no protection and may require probate anyway.
Look at beneficiary designations on retirement accounts, life insurance policies, and bank accounts. These designations pass outside of the Will and the Trust, directly to whoever is named. If those designations are outdated, pointing to a deceased spouse or an estranged family member, now is the time to correct them.
Understand What Medicaid Looks At and Why Timing Matters So Much
Nursing home care in Michigan can cost anywhere from $8,000 to $12,000 or more per month. Most families cannot sustain that indefinitely out of pocket. Medicaid is often the long-term solution, but qualifying for Medicaid requires meeting strict financial eligibility rules, and those rules carry a five-year lookback period that catches many families off guard.
Here is how the lookback works: when you apply for Medicaid to cover nursing home costs, the state reviews all financial transactions you made in the five years prior to your application date. If you gave away money, transferred assets to your children, or sold property for less than fair market value during that window, Medicaid may impose a penalty period during which you are ineligible for benefits. The penalty is calculated based on the amount transferred. The larger the transfer, the longer the penalty. And during that penalty period, the nursing home still expects to be paid.
This is why families who try to hurriedly transfer assets to their children right before a nursing home admission often make a costly mistake. If the transfer happened within five years of a Medicaid application, it will likely trigger a penalty. The time to do Medicaid planning is years before it is needed, not in the parking lot of the nursing home.
That said, there are still legal strategies available even after admission, including certain types of annuities, spousal protections, and exempt asset rules. These strategies are complex and highly fact-specific. Working with an Estate Planning attorney who understands Medicaid law is essential here. Do not rely on general information you find online or advice from the admissions coordinator at the facility, whose job is not to protect your financial interests.
Do Not Sign the Nursing Home Admission Agreement Without Reading It
Nursing home admission agreements are lengthy legal contracts. They cover payment terms, what happens if you run out of money, arbitration clauses, and sometimes language that attempts to make a family member personally responsible for the resident’s bill. That last part deserves your full attention.
Under federal law, a nursing home cannot require a third party to personally guarantee payment as a condition of admission. But some facilities include language that a family member signing as an “authorized representative” or “responsible party” could be interpreted as accepting personal financial liability. You should read every page and, if something is unclear, get clarification before you sign. An Estate Planning or elder law attorney can review the agreement with you and flag anything that crosses a legal line.
Pay particular attention to arbitration clauses. These clauses require you to resolve disputes through private arbitration rather than through the court system, which limits your legal options significantly if there is ever a problem with the care being provided. You may have the right to opt out of the arbitration provision, and you should consider doing so.
Protect the Spouse Who Is Staying Home
When one spouse moves into a nursing home and the other stays in the family home, a whole separate set of issues arises. Michigan law provides some protections for the community spouse (the one who remains at home), but those protections have limits and they must be actively used.
The community spouse is allowed to keep a certain amount of assets, a protected amount set by Medicaid rules, without those assets counting against the nursing home spouse’s eligibility. There is also a minimum monthly maintenance needs allowance that protects a portion of income for the community spouse. But navigating these rules correctly requires careful planning and documentation.
The family home itself is generally exempt from Medicaid eligibility calculations while the community spouse lives there. However, after both spouses have passed, Medicaid may pursue estate recovery, meaning the state can seek reimbursement for benefits paid by making a claim against the estate. Proper Trust planning can sometimes address this, but it must be done correctly and ideally well in advance.
If the couple does not have up-to-date Estate Planning Documents that reflect what should happen to the community spouse’s assets and the family home, this is the time to address it. A Will or Trust that was drafted decades ago may not account for the current Medicaid landscape or your family’s actual wishes today.
Get Your Documents Organized Before You Need Them
Once you are in the middle of a nursing home transition, everyone will be asking for documents at once. The nursing home, the Medicaid office, the bank, the insurance company. Having everything organized in advance saves time, prevents delays, and reduces the stress of the situation considerably.
Here is a list of documents to gather and have ready:
- Financial Power of Attorney
- Medical Power of Attorney and Healthcare Directive
- Will and any Trust documents
- Recent bank and investment account statements
- Deeds to any real property
- Life insurance policies and beneficiary designations
- Retirement account statements and beneficiary designations
- Social Security and pension income documentation
- Medicare and Medicaid cards and correspondence
- Birth certificate and, if applicable, marriage certificate
Having these documents organized in one place does not just help with the immediate transition. It also gives whoever holds the Power of Attorney the information they need to manage finances and benefits properly over time.
This Is Not a One-Time Conversation
Estate Planning in the context of a nursing home admission is not a single meeting and a stack of signed documents. It is an ongoing process. Benefits can change. Family circumstances evolve. Assets get spent down. The person’s health and wishes may shift over time. The Estate Plan should be reviewed periodically to make sure it still reflects reality and still accomplishes what the family needs it to accomplish.
If you are in the middle of this transition right now, or you can see it on the horizon for yourself or someone you love, the best thing you can do is talk to an attorney before the crisis forces your hand. The decisions you make in the weeks surrounding a nursing home admission can affect your family’s financial security for years. Making them with professional guidance, rather than under pressure and without full information, is always the better path.
At LADIES IN LAW®, we help families in Michigan navigate exactly these situations. Whether you need to create or update an Estate Plan, review a nursing home admission agreement, or understand your Medicaid options, we are here to help you make informed decisions every step of the way. Reach out to schedule a consultation before the paperwork starts.
