Don’t Forget About Medicaid Estate Planning Strategies
For many people who are in need of long term care in the later stages of their lives, Medicaid is a lifesaver. Medicaid often provides the care needed for people to get necessary medical care, or for people to get care at a medical or nursing home facility.
Medicaid and Need
But Medicaid is a need-based system, based on the recipient’s income. If someone has more than $2,000 in assets, they may be disqualified from receiving Medicaid benefits. You also cannot have transferred assets out of your name in order to meet that threshold, within five (5) years of applying for Medicaid benefits. That means that just giving away property, won’t help you qualify–and could lead to huge delays in ever getting Medicaid.
Trusts Can be Helpful
Many people are concerned that if they leave property in their estate plan, that property (or money) could jeopardize their loved ones’ right to benefits. One way that you can make sure that you, or a loved one who is a beneficiary, doesn’t jeopardize his or her rights to Medicaid when receiving your inheritance is through the use of an irrevocable trust.
However, in order to do this, the trust must be established five years before the application for Medicaid benefits is made by the recipient. You must have no access to use the principle in the trust, and a separate trustee must be named to manage the property or assets that are in the trust.
You can also utilize a Medicaid income trust, which can accept income that the beneficiary may earn, which would put him or her over the income allowed to get Medicaid.
There are other ways that you can protect a loved ones’ right to Medicaid, but whatever method you use, it is important to remember that Medicaid planning can be different, with different goals, than traditional estate planning.
Spending Down Your Assets to Qualify
Good Medicaid planning can also help you, if you are the one expecting to need or receive Medicaid, but you currently have more than the legally allowable limit of assets. There are ways to spend down your income or assets, in a way that is allowable under Medicaid laws.
However, if you spend down assets incorrectly, in ways that are not allowed, you could be denied Medicaid, and prohibited from reapplying for many years. This is why it is important to have a comprehensive Medicaid estate plan.
Losing Your Home
Medicaid planning can also prevent you from losing your home to Medicaid after you pass. This is because Medicaid can often look to be paid back for what it paid, after death. It often gets paid back, by taking property like a home that is left in an estate. But good Medicaid planning can help ensure this doesn’t happen.
Call the Torrance estate planning attorneys at Samuel Ford Law today to discuss protecting your loved ones, and their inheritances.