What folks commonly refer to as "Medicaid Planning" is a different kettle of fish.
The subject itself involves a unique stew of laws, rules and regulations with an interesting ethical tension tossed in for good measure.
With that noted, we turn to a recent article in the Huffington Post titled “Some Legal Issues at the Intersection of Elder Law and Estate Planning.”
As the article reports, one way to maximize eligibility for means-tested Medicaid benefits) is an "income reduction" technique involving a Qualified Income Trust (QIT).
These trusts are often referred to as “Miller Trusts” after the court case that authorized them.
In addition, there are various "special needs trusts" that can be created without reducing government benefits.
Either way, before embarking on the creation of a QIT or a special needs trust, engage the services of an experienced elder law attorney.
But, Kyle, I can just give away my assets to my children to become "means-tested" eligible for Medicaid, right?
Au contraire.
Obviously you have not heard of the five-year look-back rule regarding gratuitous (gifts) transfers.
Medicaid eligibility requires an examination of any assets transferred to third parties within the 60 months prior to the Medicaid application.
There are narrow exceptions.
For example, you may make transfers to your spouse without penalty.
Also, a somewhat common scenario is one where a child lives with and cares for a parent. If a physician will opine that such care delayed institutional care, then the caregiver child may receive "compensation" without triggering a Medicaid penalty.
This exception is known as the "two-year caretaker rule." Again, qualification for this can be extremely complex and requires the assistance of an experienced elder law attorney.
I recommend that you read the original article and, better yet, consult with an elder law attorney without delay, if you (or a loved one) have concerns about funding long-term care needs.
While you are at it, consider exploring how to pay your own way should you need long-term care. There are many varieties of long-term care insurance options available now.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
Reference: Huffington Post (September 22, 2015) “Some Legal Issues at the Intersection of Elder Law and Estate Planning”
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