Where there is a potential that nursing home care will use up life savings, an Elder Law professional should be consulted to determine the best course of action. The following quotes from Brad Reid of the Huffington Post Blog are a good starting point:
Estate planning frequently addresses property transfers in contemplation of death while elder law considers retirement income issues. While it is easy to consider the two issues in isolation, this is frequently a mistake.
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A significant ethical and legal issue is whether or not to dispose of assets through pre-need planning in order to qualify for means-tested government programs such as Medicaid that might pay, for example, the cost of long term nursing home care.
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Assuming that one wishes to maximize eligibility for means-tested governmental benefits, a common income reduction technique in a number of states is to create a Qualified Income Trust (QIT), often called a Miller Trust due to a 1990 decision, Miller v. Ibarra.
The entire article can be found here. It should be pointed out that not only is this article merely a starting point for answers to these questions, but California law currently provides unique options that may be useful in dealing with the problem of covering long term care costs. Qualified Elder Law professionals should be consulted.