Strategies to Protect Your Assets From Medicaid

Medicaid is an essential element for many people to afford long-term care. Long-term care is extremely expensive, and unless you are already wealthy or have a long-term care insurance policy in place, you may need assistance paying for nursing or retirement home care. Medicaid is a needs-based governmental program that covers the costs of long-term care, among other things. To qualify for Medicaid, however, you must have limited assets and income. Moreover, Medicaid may seek to recover the costs they paid from your estate upon your death. In order to obtain assistance from Medicaid while ensuring that your assets are distributed to your heirs, you might need to employ one or more estate planning strategies. Continue reading for advice on several strategies you can use to protect your assets from Medicaid, and reach out to an experienced West Palm Beach long-term care and asset protection attorney if you have any questions.

Asset Protection Trusts

Asset protection trusts are designed to do exactly as the name implies: protect your assets. When you have assets in your estate that you plan to pass to your family by way of will or probate, Medicaid and other creditors can collect what you owe from your estate upon your passing. Your family will get less of your estate and may even have certain assets taken away entirely.

When you set up an asset protection trust, any assets you transfer to the trust no longer belong to you. The assets belong to the trust. That means that your creditors, including Medicaid, cannot attach or collect those assets to repay debts that you owe. The trust can be set up to distribute proceeds or assets to your family or other beneficiaries, much like a will, but those assets will avoid probate and thus avoid estate tax and collection by Medicaid and other creditors. You can even transfer ownership of your family home to a trust while retaining the right to reside in the home for the remainder of your life.

Income Trusts

Only individuals with incomes and assets below a certain threshold can qualify for Medicaid. Individuals whose income exceeds the threshold may lose out on their ability to obtain Medicaid benefits, even though the cost of long-term care exceeds their means. There are financial tools available to shield your income from Medicaid and maintain eligibility.

Depending upon your circumstances, you may be able to utilize either a Qualified Income Trust (QIT) or a Pooled Income Trust (PIT). Both types of trusts are used to house excess income to maintain Medicaid eligibility. PITs are special trusts available to disabled individuals and involve utilizing a non-profit organization to manage the trust assets. Talk to an elder law and asset protection attorney about your circumstances to find out which form of trust may work best for you.

Spousal Transfer

Medicaid penalizes applicants who transfer assets to friends and family members within a certain period before applying for Medicaid (the “look-back period”). The look-back period and the associated penalties do not, however, apply to transfers between spouses. An individual looking to apply for Medicaid can boost eligibility and protect assets against later collection by making a gift of the assets to their spouse while they are still alive.

Call Shalloway & Shalloway, P.A., to Plan for Long-Term Care, Medicaid Qualification, and Asset Protection

An experienced West Palm Beach elder law attorney can help you and your family plan appropriately to maximize your chances to qualify for Medicaid and other needs-based governmental programs while protecting your assets from collection upon your passing. If you are in need of a professional, qualified Florida asset protection and elder law attorney, contact the seasoned West Palm Beach elder law attorneys of Shalloway & Shalloway at 561-686-6200.