Shielding Your Assets and Planning for Medicaid: What You Need to Know

Medicaid planning, in theory, should be pretty straightforward.

After all, millions of people depend on Medicaid to some extent to pay for late in life care. We’ve collectively had decades to work out kinks in the system. And the basic concepts underlying this government safety net are easy to understand.

Unfortunately, many people severely underestimate both the logistics involved and the degree to which your planning (or lack thereof!) can impact your future—and the legacy you leave.

With careful planning for Medicaid, you may be able to:

1. Preserve your estate for your children or other beneficiaries;
2. Meet the asset limits to qualify for Medicaid.

Threading this needle isn’t intuitive. Medicaid is set up to help the truly indigent. For instance, in most states, for example, to qualify for this assistance, a resident in a nursing home may only have $2,000 in “countable” assets. That’s not much. So how do you qualify for Medicaid short of liquidating everything you own?

Should you just transfer your assets (e.g. your home) to someone you trust, so it looks like you have nothing left? Doing so thoughtlessly is dangerous. First, even if you handed over assets to a loved one—a responsible adult child, for instance—you lose control. Second, you (and the loved one) could face massive tax consequences. For instance, let’s say you gift the family home to your daughter, who later turns around and sells it. She could face crushing capital gains taxes.

Your ideal solution will depend sensitively on your situation. One versatile tool to consider is the irrevocable living trust. A trust is a legal arrangement in which one person, known as the trustee, claims legal title to asset for the benefit of others, known as beneficiaries. The trustee must follow carefully orchestrated rules. In many cases, establishing a living trust can protect your assets and allow you to qualify for Medicaid assistance.

Which tools are right for you? What strategy should you pursue? To schedule a strategic consultation, please contact our team,


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