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Medicaid Planning: How to Protect Your Assets

As the founder of the Elder and Estate Planning Law Firm, I specialize in helping Michigan families protect their estates. Whether you are worried about nursing home expenses that average nearly $9,000.00 per month, assisted living expenses, having your estate avoid probate court or planning for a special needs child or grandchild, I have helped thousands of families obtain peace of mind when faced with such issues. Often this involves qualifying for Medicaid or VA benefits, creating a trust for an estate or a special needs trust for a disabled loved one.

Despite harsh restrictions, qualifying for Medicaid benefits is still possible. An experienced elder law attorney can help you qualify for Medicaid using proper planning. My clients have found this information to be a valuable resource, and I trust you also will find it useful.

1. Plan your estate.

Will or Trust, Durable Power of Attorney and Health Care Power of Attorney.

Even after a loved one has moved into a nursing home, legal strategies can be used to protect assets. Generally this will often require at least having a suitable durable power of attorney.

2. Revocable trust.

For a married couple, having your assets including your home titled in your revocable trust before being admitted to a hospital or nursing home can in some instances, protect additional assets.

3. Irrevocable trust.

Assets in an irrevocable trust are exempt under the Medicaid rules. However, under the Medicaid rules, there is a 5 year look back period for any transfers into an irrevocable trust.

4. Pre-pay funeral expenses.

A pre-paid funeral plan (if done correctly) is an exempt asset under the Medicaid rules.

5. Gifting or Transferring Assets.

The gifting or transferring of any assets for less than fair market value within the 5 year look back period will cause a penalty under the Medicaid rules.

6. Converting countable assets to exempt assets.

In addition to a pre-paid funeral, other assets are exempt (not counted) under the Medicaid rules. These include: 1 home, 1 car, life insurance up to $1500.00, personal and household items and $2000.00. Buying a new car or undertaking home repairs or improvements are allowable.

7. Paying bills or other personal expenses.

Paying credit card bills, mortgages, car payments, or other personal expenses is permissible under the Medicaid rules.

8. Transfers to non-spouses.

The Medicaid rules provide that certain gifts or transfers are not subject to the penalty rules. These include transferring a home to a caregiver child (must live and provide care in the home for at least 2 years) or transferring assets to a blind or disabled child.

9. Estate Recovery.

Estate recovery allows the state to seek reimbursement from the probate estate of a Medicaid recipient after the person dies. In 2007, Michigan became the last state in the nation to adopt an estate recovery law. For any Medicaid recipient, it is very important to ensure their assets avoid probate court following their death.

10. Get help from a Medicaid expert.

There is no magic bullet when it comes to Medicaid planning. Typically, one or more strategies are used to protect assets depending on the specific, individual circumstances. However, nearly everyone claims to know someone who expresses some personal knowledge about Medicaid planning. In my experience, the majority of time this type of advice is incorrect and actually causes additional problems. Medicaid is a complicated area of law that is frequently changing. With so much at stake, it is foolish not to consult with people who make a living guiding clients through the Medicaid planning process.

This blog post is written by Brett A. Howell, Certified Elder Law Attorney. The blog is written as a service of The Elder and Estate Planning Law Firm, P.L.L.C. This information is for general informational purposes only and does not constitute legal advice. For a consultation to address specific questions, please call (810) 953-3846.


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