When many people retire, they assume that their finances are in order and that they will live out their retirement comfortably in their homes. Unfortunately, as retirees age, the chances of suffering long-term illness or a serious injury tends to increase. Sadly, and much too often, families are not prepared for the changes that can occur when an older family member suffers an injury or illness that may require that person to spend the rest of his or her days in an assisted living facility or nursing home. An elder law, estate planning, and Medicaid planning attorney can help mitigate some of these problems and give families peace of mind by utilizing different tools and strategies to help families plan ahead for these situations.
Create protections early
Medicaid rules currently allow a five year “look back” period on asset transfers. This means that Medicaid case workers will look back five years from the time an applicant applies for Medicaid to see if any assets were improperly transferred. Those who were given gifts improperly during that five year period may be forced to liquidate those gifts to pay for the applicant’s assisted living or nursing home care. However, families who have taken the time to lay out an estate plan can avoid this problem.
Understanding Medicaid Rules
In nearly all cases, a Medicaid applicant’s assets cannot exceed $2,000 to qualify for Medicaid assistance. To avoid this requirement, an irrevocable trust can be set-up that will benefit the applicant while he or she is alive and still allow him or her to meet the Medicaid guidelines. Medicaid rules are very strict, so a trust designed to bypass Medicaid requirements must include clauses that will not violate the $2,000 dollar rule. However, assets transferred to a trust within five years will be counted towards the applicant’s Medicaid eligibility.
There are no universal solutions for establishing an estate plan. Everyone’s financial situation is different. However, with the help of an elder law, estate planning, and Medicaid planning attorney who understands the rules, you can protect your assets and make sure that your final wishes are carried out.
Bill Hesch is a CPA, PFS (Personal Financial Specialist), and an attorney licensed in Ohio and Kentucky who helps clients with their financial planning. He also practices elder law planning, estate planning, and Medicaid planning in the Greater Cincinnati and Northern Kentucky areas. His practice area includes Hamilton County, Butler County, Warren County, and Clermont County in Ohio, and Campbell County, Kenton County, and Boone County in Kentucky. Please contact him to establish a plan for you or a loved one to avoid these heartbreaking problems.