How To Protect Your Assets – In this article, we cover the topic of protecting your assets from Medicaid. You may have heard of this option before, but didn’t know what it was or how it might work for you. We hope that by the end of this piece, you will be more informed and able to continue planning your next financial move.
First, we want to step back and explain why there is so much fuss about assets when talking about Medicaid benefits.
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Simply put, if you have too many assets, you won’t get Medicaid. For example, in 2020, for a married couple in New York who both claim benefits, the limit is $23,100. If the spouse has more property than this amount, benefits will not be confirmed for him.
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So what we’re talking about here is managing your assets in a way that allows you to qualify for Medicaid. In other words, just because you have too many assets to qualify now doesn’t mean you’ll be eligible in the future.
As we work through this article, you’ll learn what you can do to be eligible while protecting your property.
There are several topics to consider in this section. First, regarding Medicaid eligibility, some of your assets do not count toward the limitations discussed earlier.
For example, things like personal property, IRAs, equity in your primary home, and vehicles all fall under the exclusion category, so they don’t go under your value limit.
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Things like cash, investments, checking accounts, non-primary residence, etc. are important for these assets. If the total assets exceed the limit, you will stray towards the qualifying image.
With that in mind, many people are looking for ways to protect their assets from Medicaid, so it doesn’t factor into the eligibility equation. One such asset protection option is a Medicaid Trust.
By putting some of your assets into the right trust, you can protect them from Medicaid and not count toward benefits. However, it is important to use the right trust for this planning strategy because it must meet certain requirements to achieve emergency status.
One of the most important pieces of this puzzle is making sure your conviction is established before your Medicaid eligibility retroactive period. The default lookback period is five years, which means you’ll want to complete it for at least five years before claiming benefits. If you set up a trust during this five-year period, it will not be considered tax-exempt and the trust’s assets will be treated as part of your application.
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The simple answer is yes – a trust can protect your assets from Medicaid. But the devil, as they say, is in the details. If you don’t use the right type of trust, these assets may not be as protected as you imagine and may count toward determining Medicaid eligibility. If you want to protect your assets in your trust, you need to do it right.
As the name suggests, a Medicaid Asset Protection Trust is the way to go here. There are several important elements of a Medicaid Trust that you should be aware of when planning.
First, it is an irrevocable trust. In other words, this means that the trust is irrevocable and the property placed in the trust does not become the property of the person who created the trust. This action is irreversible, so every step of the process must be carefully considered before the trust is finalized.
It may be helpful to run through a quick example to make sure you understand the basic concepts here. To begin with, there has to be someone who creates trust. For example, you set up a trust to protect some of your Medicaid assets while trying to make a profit. This makes you a trustee, although there are other terms that could be used.
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Besides you as the trustee, there are two other important parties – the trustee and the beneficiary. The trustee is the person who has control over the trust and cannot be the same person who created the trust, so you cannot be the trustee yourself.
Often, people use their grown children to serve as guardians, but it can be anyone they trust with this task. The trustee must act in accordance with the rules established when the trust fund was formed. Part of the rule is that the trustee cannot use the property because the entire purpose of a Medicaid Trust is to remove the property from the individual’s ownership in the first place.
Finally we come to the beneficiary or beneficiaries. This is the person who receives the trust property when you pass away. Again, just as you cannot be a trustee, you cannot be named as a beneficiary of your trust. Of course, your children are named heirs, but the choice is ultimately yours.
That’s a lot of information on this important topic, but the key points to remember are:
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· If you hope to protect your Medicaid assets, it is important to use the right type of trust
· If you are a trustee, you must name the trustee and the beneficiary or beneficiaries.
· The trust must be irrevocable, which means you need to be careful with your planning before making it official.
There are several important topics to discuss regarding your home and Medicaid. First is the question of qualifying for Medicaid if you own a home. If you’ve lived in your home for a long time, you likely have enough equity built up in your home.
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In fact, there’s a good chance it’s your most valuable asset. It may be the only asset of significant value. So, if you have a home with significant equity due to current market conditions, are you out of luck for Medicaid?
Unspecified. Your primary home is one of the assets that is exempt from the asset limits set forth in the Medicaid eligibility rules. So don’t make the mistake of assuming you’re ineligible for Medicaid just because you have a home with positive equity.
Another important thing is to protect your home from Medicaid Recovery after graduation. Many people want their children to take the house when they pass, so that the children can keep the house in the family, or so that it can be sold and the proceeds divided. Either way, you’d rather keep your home in the family than lose it to Medicaid Recovery.
This is where the idea of trust comes back. With a Medicaid Asset Protection Trust, the home itself can be held in trust and then protected from Medicaid (if the trust is done correctly). As an additional benefit, you can stay in the house for the time being, as the right to live in the house can arise when trust is established. If you’ve been considering a Medicaid Asset Protection Trust, the ability to give your home to a trust is one reason to seriously consider this method.
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If you need long-term care and are seeking Medicaid benefits to pay for that care, you may be concerned about what will happen to your spouse’s income and assets as part of the process. If your spouse does not currently require care, they may not be able to apply for Medicaid with you, so their own financial lives should be considered. Fortunately, there are rules that provide important protections for spouses of individuals receiving Medicaid benefits.
There are safeguards in place to address your spouse’s income and assets. For example, a spouse can keep half of the property he owns, although there are limitations to this provision. In addition, spouses are allowed to keep all of their income, even if the amount exceeds the Medicaid income limit. It works too
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