Asset Protection From Medicaid

The Deficit Reduction Act of 2005 established a June 30, 2006 deadline for the Secretary of Health and Human Services (HHS) to release regulations for states to come in compliance with the new severe new restrictions on the ability of the elderly to transfer assets before qualifying for Medicaid coverage of nursing home care.

The law extends Medicaid's "lookback" period for all asset transfers to 5 years, it was originally 3 years and changes the start of the penalty period for transferred assets from the date of transfer to the date when the individual transferring the assets enters the nursing home. Qualification to the nursing home is achieved when the individual is out of funds, meaning he/she cannot afford to pay the nursing home.

The new federal law applies to all transfers made on or after the date of enactment, February 8, 2006. Any transfer made before February 8 falls under the old transfer rules. Exact enactment provisions are state by state, but its clear that non-compliance by 50 state legislatures puts their federal funding at risk.

You can protect yourself from the Medicaid nursing home care by taking action now while you still have your health.

You can reposition (transfer) your assets from you to an irrevocable trust with a truly independent trustee. The key is the Independence of your Trustee. The trustee cannot be anyone related to you by blood or marriage. And, you must be willing to give-up complete control over your assets. This lack of perceived control is the most difficult to achieve. Seniors have a deep sense of independence by their ability to control and manage their assets.

Revocable or irrevocable trust, whats that mean? Revocable is when the original person with the assets transfers (repositions) the assets to a trust with strings attached. The tax lingo is grantor-type trust. The strings when the original grantor (person with the assets) elects himself as the trustee, and the beneficiary of the trust. The grantor, the trustee, and the beneficiary are the same person. Effectively you have kissed yourself on the hand and blessed yourself as the pope. This simply will not work. Period.

An irrevocable trust is when the grantor (the person with the assets) gives-up complete control to an independent trustee who in turn will use his judgment as trustee to manage the assets for the beneficiaries of the trust. The fiduciary relationship of the trustee is to the protection of the assets at any cost. The trustee must protect and must diligently invest under the prudent man rules; he cannot ever deal for himself. The courts do not look favorably on dereliction of duties while serving as trustee. An irrevocable trust is the only significant asset protection device for avoiding the Medicaid spend-down provisions.

Asset protection from Medicaid requires foresight and a strong conviction to walk away from perceived control. Inaction is devastating. Seniors must use all their funds first, then qualify for the nursing home. Its clear, that these new rules are designed to impoverish the healthy spouse.

author bio - Rocco Beatrice, CPA, MST, MBA
award-winning estate planning & trust expert
MS - Taxation, Master of Science Taxation
MBA - Management / Taxation
BSBA - Management / Accounting
CPA - Certified Public Accountant
-----
Irrevocable Trust Asset Protection
Nursing Home Spend-Down
Original article posted here: Asset Protection from Medicaid
71 Commercial Street #150, Boston, MA 02109
tel: +1.508.429.0011 fax: +1.508.429.3034

Medicaid Asset Protection
As tax preparation time begins, many seniors are asking to include Medicaid asset protection as part of their tax planning strategies. For those of yo...

Protecting Assets From Nursing Home Costs
Protecting assets from nursing home costs is the latest challenge for seniors where government is demanding an uncapped spent down of their asset if o...

Medicaid Home Exemption May Become Limited Under New Law
President Bush has included a provision in his 2008 Budget Proposal that would eliminate the ability of states to exempt more than $500,000 of a home'...

Medicaid - Should We Just Go Ahead and Sell the House?
"My mother, who is a widow, has no savings but owns a home, valued at $200,000, and just entered a nursing home. The cost is $6,000 a month! The only ...

Strategies on Paying for Nursing Home Care and Medicaid
The decision to place your loved one into a nursing home is anr extremely difficult decision, often causing much guilt for ther caregiver. It is a ver...

My Spouse Has to Go into a Nursing Home…How Much Can I Keep?
Most people know that in order to qualify for Medicaid coverage of a long-term stay in a nursing home, the nursing home resident cannot own more than ...

How to Get a Free Power Wheelchair
In the last 15 years, the motorized wheelchair (also known as the power wheelchair) has made it possible for hundreds of thousands of Americans to reg...

Leaving Home: Will Medicaid Still Exempt My Home?
Under the current Medicaid laws, even after you enter a nursing home your personal residence will not be counted as part of your assets, in determinin...

Wedding Bells: If You’re Over 75, Be Careful!
A number of times I've been approached by happy family members telling me about an elderly relative who, at age 75, 80, or 85, is getting married and ...

Medicaid and Failure to Elect Against the Will of a Spouse
In a recent case in New Jersey a man died survived by his wife, who was then living in a nursing home. Under NJ law (as in most states) one spouse can...

How the Spouse at Home Can Get More Income from the Nursing Home Spouse on Medicaid
"My wife is on Medicaid, now, which is great. They pay all her nursing home bills and she's well taken care of, there. But what about me? I can barely...

Secret Dollars - Veterans’ Benefit for Long-Term Care Revealed
One of the Veteran Administration's best-kept secrets, which is an excellent potential source of funds for long-term care (either at home or in an ass...

I Can’t Afford an Elder Care Lawyer…Can I?
Many of us are worried about the high cost of lawyers, and feel that we can now go online and find all the free forms and free advice we need. While i...

What You Need to Know About Helping Senior Citizens
IntroductionThe baby boomers is the population which haven taken birth after second world war till 1965 when there was a tremendous increase in birth ...

How To Choose A Good Nursing Home
With nursing homes costing anywhere from $3,500 to $10,000 per month (depending on your state), and with the average stay about 2 1/2 years, the total...