The single most important reason to visit a New York elder law attorney is to learn about various Medicaid Strategies to protect assets from nursing home costs. No matter what one’s situation in life–whether in excellent health with long-term care decades away, on the nursing home doorstep, or even already in a home–there are planning options available to assist families. In each case the assistance of professional help is essential. Mistakes could lead to Medicaid penalties that put families in difficult financial situations and eliminate any chance of leaving an inheritance.
For example, yesterday Elder Law Answers discussed a New York appellate decision that upheld a Medicaid penalty where a written agreement was missing in an asset transfer between mother and daughter. In that case, a woman was entering a nursing home. She transferred money from a revocable trust and gave it to her daughter for less than fair market value and without a written agreement providing for repayment. Medicaid investigators learned of the transfer and determined that it triggered a penalty period whereby the woman would not be eligible for benefits for nearly fifteen months. Her family will now have to come up with the resources to provide the necessary care during the penalty period.
When properly executed a “gift and loan” strategy can be used to save some of a senior’s assets from being consumed by long-term care costs–even when on the nursing home doorstep. This technique involves gifting one half of assets to a loved one and then loaning the other half. The loan would take the form of a promissory note where the family member agrees to repay the loan at a certain monthly amount with modest interest. Medicaid is then applied for following the gift and the loan. The gift will trigger a penalty period based on the size of the gift amount, but the loan is ignored because it must be repaid. The loan repayment can then be used to pay for nursing homes costs during this penalty period. In this way, half of an estate may be saved as an inheritance even when little planning has been conducted prior to entering a long-term care facility.
Whether it involves the five-year look back period in a Medicaid Asset Protection Trust or more complex actions like the “gift and loan” strategy, attempting to save assets without proper planning could trigger a Medicaid penalty. There is no substitute for experienced assistance with each of these Medicaid Strategies.
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