Medicaid Asset Protection
Asset Protection Planning, in the context below, deals with the concerns of long term care. We are not discussing millionaires who are using off-shore accounts on some exotic island. If you own a home or have any other assets with equity then you need to speak with an attorney to protect those assets for your heirs. If you need Home Care or Nursing Home Care and wish to apply for Medicaid Benefits, with proper legal advice, you will not be forced to spend down your income and your assets until you have practically nothing left.
Obtain legal advice from a New York Elder Law attorney at Castiglia-Rubinstein & Associates to understand your options, and ask for a comprehensive Medicaid plan for you, to conserve your income and your savings call us today. Our attorneys are not only trained in handling simple estate matters, we take care of complex medicaid planning and estate litigation in the event of the need for Medicaid Planning in Nassau County, Suffolk County, Queens County, Bronx, Westchester, Richmond County, Manhattan and Brooklyn Kings County New York.
In long term care asset protection planning, we are answering three questions of how we are going to pay for our care:
- Pay the costs out of your own pocket (decreasing the size of the estate your children will inherit)
- Pay for long term care through long term care insurance (if you are insurable and it is affordable)
- Apply for and qualify for government benefits such as Medicaid and Veterans Benefits; after the proper planning with an estate planning attorney.
Trust vs Wills * Removal of a Trustee * Guardianship * Probate * Beneficiary Rights
Medicaid Asset Protection * Probate Litigation * Estate Litigation * Living Trusts
In Home Care * Supplemental Needs Trusts * Fraudulent Transfers
When is Asset Protection Planning Considered?
One timeframe is often referred to as a “crisis”, when asset protection must be implemented as quickly as possible according to strict guidelines, unique rules, and limited options. Since most people fail to properly plan ahead this is most frequently seen in Medicaid crisis planning or VA Benefits planning where a comprehensive asset protection plan is discussed, customized and implemented so that eligibility can be obtained in a matter of a few weeks with the assistance of the Law Office of Castiglia-Rubinstein & Associates.
As with any complex area of life and law, pre-planning is key. An informed client and an experienced elder law attorney are both crucial to the proper planning of yours’ or a loved one’s long-term care needs. That is why we offer this website information, in order to educate and inform, so that “non-crisis” decisions can be made and implemented; and, asset protection planning can be accomplished without all the fear, drama and uncertainty associated with crisis planning.At the Law Office of Castiglia-Rubinstein & Associates, we offer a variety of pre-planning techniques and opportunities currently available under New York State law. As with any area of law, these particular techniques require specific knowledge and training. Let’s now briefly discuss the important role that irrevocable trusts can play in pre-planning for maximum asset protection.
Using Irrevocable Trusts
Irrevocable trusts can be flexible enough to cover a plethora of circumstances. These trusts can be written to accomplish a wide variety of objectives and purposes. Such objectives and purposes range from asset protection to estate tax shelters to protection of government assistance benefits for an ill spouse or a person with disabilities.
One of the most important roles for an irrevocable trust is asset protection in the event of a long term care illness, such as Alzheimers, dementia, Parkinsons, stroke, etc. The goal is to place assets into a properly drafted irrevocable trust, which minimizes loss of control while maximizing future eligibility for Medicaid and Veterans benefits. In this way, you are limiting the erosion of your estate’s assets, safeguarding those assets for you or your spouse’s future needs, and ensuring an inheritance is available to pass to your beneficiaries.
CAUTION: An Irrevocable Trust drafted to meet the rules and regulations for Medicaid to disregard the trust’s assets as available resources is very different than an Irrevocable Trust drafted to meet the rules and regulations for the Veterans Administration to disregard the trust’s assets as net worth. This is a critical area where you must know you are working with an Expert in Elder Law, including Medicaid and Veterans Benefits. If your elder law attorney cannot explain the difference between the types of irrevocable trusts necessary in each context, then you likely are not working with an expert.
Who Should Consider an Irrevocable Trust?
There is no “black-and-white” answer to this question. But, here are a few general guidelines.
Obviously, irrevocable trusts should be established by older adults who wish to protect their assets. The older adult needs a sense of emotional security because he or she must be ready to relinquish direct control over his or her assets. Most of the control over the assets is turned over to a loved and trusted family member, who acts as trustee of the trust. The trustee is in charge of guarding the assets in the irrevocable trust, in case a future need arises. Meanwhile, the older adult continues to maintain direct control over his or her income, such as social security and pensions, as well as assets chosen to remain outside the irrevocable trust. The trust works particularly well for those older adults that are not eroding the principal of their existing assets.
Irrevocable trusts have the additional benefit of passing assets to beneficiaries of the older adult without requiring a probate. Also, the irrevocable trust can set incorporate special purpose estate planning, such as special needs trusts or discretionary trusts for children
Because the transfer of assets to an irrevocable trust is subject to a waiting period for Medicaid eligibility of 5 years, it is anticipated that the older adult will not need nursing home care for 2 or 3 years. If the older adult is a veteran or a widow(er) of a veteran, then eligibility for the Veterans Aid & Attendance benefit is not subject to a waiting period. This provides more flexibility for a veteran or a widow(er), allowing him or her to establish an irrevocable trust with less concern over an unanticipated medical crisis.
What are the Steps for Establishing the Irrevocable Trust?
Your irrevocable trust should be created as a result of a customized plan suited to your personal objectives and not a “one size fits all” form. Since the irrevocable trust must accomplish your objectives, we need to know for what purpose or purposes we are planning.
A multitude of questions must be answered before the trust can be drafted by your elder law attorney. Do you want to achieve Medicaid benefits in the future? Are you a veteran or a widow(er) of a veteran so that the trust must allow for Veterans Benefits to be attainable in the future? Do you want to retain income from the assets after they are placed in the irrevocable trust? What other controls do you want to retain? Will you appoint a neutral, independent third party to have specific authorities to adapt the trust to unforeseen circumstances, such as future changes in the law? Will there be tax advantages built into the irrevocable trust? Do you need to draft any protections for your ultimate beneficiaries of the trust who are disabled or who creditor issues or who get divorced?
After a full understanding of the purposes for the irrevocable trust, then your assets need to be analyzed. Some assets, as compared to other assets, may be selected to go into the irrevocable trust. In addition, what is an appropriate amount of assets to place in the irrevocable trust and what is an appropriate amount of assets to be left out of the trust? Again these are all very important considerations that go into an asset protection plan using an irrevocable trust.
Medicaid Asset Protection
What are the benefits to planning ahead with irrevocable trusts for Medicaid eligibility? There are several. First, you are achieving a future that has certainty. You have a definite time line, beyond which you have a definite answer, meaning Medicaid eligibility.
With assets protected in the irrevocable trust, future Medicaid eligibility may be as simple as merely filing an application. Furthermore, despite any law changes that occur making asset protection planning more strict, these will not affect you. For instance, if a homestead, which is ordinarily exempt in almost all circumstances, becomes a countable asset after a short confinement to a care facility, having the homestead as a part of the irrevocable trust protects that homestead – forever.
With Medicaid, the rules regarding irrevocable trusts are less restrictive. In other words, you lose less control over your assets when implementing Medicaid asset protection planning. You maintain multiple options. Not only can you select your Trustee, you can remove the Trustee. You can maintain your rights to all the income earned from the irrevocable trust assets. And, you keep the ability to change your mind until your death about who your beneficiaries will be.
Finally, there’s flexibility even if you have a medical crisis within the Medicaid waiting period. As mentioned above, when you move forward, you are getting certainty. But, if that certainty is disrupted because of a medical emergency, and if keeping the irrevocable trust intact doesn’t make sense, there are mechanisms within the irrevocable trust to return the unused assets to you. What has been lost? In the end, really nothing other than the initial efforts put forth for the pre-planning.
Veterans Benefits Asset Protection
What are the benefits to planning ahead with irrevocable trusts for Veterans Benefits eligibility? Many of the same benefits as in Medicaid planning. However, the most prominent benefit to using an irrevocable trust to hold assets to achieve Veterans Benefits eligibility is control.
For VA Aid & Attendance benefits, current VA rules do not impose a waiting period before you can access the benefit because you have transferred assets out of your ownership. This means you can transfer ownership of your assets to any one or any other entity, like an irrevocable trust, without imposition of a waiting period.
Even though you can obtain VA A&A benefits by merely giving away your assets to your children, why would you? By placing your assets in an irrevocable trust, you are not making an outright gift to your children. This means you are avoiding most of the problems with outright gifts. Your children don’t have to think about the temptations of spending those assets, even though they are supposed to hold the assets in case you need them in the future. And your assets, owned by the irrevocable trust, are not subject to the child’s creditor’s claims or divorce.
Asset Protection Planning, whether in the context of VA A&A benefits or Medicaid long term care, it is critically important before moving forward with particular strategies that you have been educated as to all the legal planning options you have and how the course you follow impacts other benefits programs. Only attorneys can discuss the law with you. And, only attorneys can prepare legal documents for you.
Frequently-Asked Questions about
Protecting Your Assets from the Nursing Home
Question 1: How much do nursing homes cost?
Question 2: Will Medicare pay for my nursing home costs?
Question 3: What government program will pay for my nursing home costs?
Question 4: How can I avoid being impoverished by the high cost of nursing home care?
Question 5: If my spouse is going into a nursing home, can he or she transfer all of his or her assets to me and qualify for Medicaid?
The spouse outside of the nursing home can retain half of otherwise non-excludible assets, up to a maximum (of around $100,000, an amount that changes annually), plus the residence, plus some personal property, plus burial reserve, plus automobile, and other miscellaneous items.It is important to understand that under New York law:
A spouse is charged with legal responsibility for the other spouse’s nursing home costs. This means that the income and resources of both spouses are considered when the spouse in the nursing home applies or considers applying for Medicaid nursing home benefits, and
If the married couple has “countable” assets in excess of about $20,000, some portion of those excess assets are at risk for the nursing home spouse’s nursing home expenses, and
A prenuptial agreement saying that the healthy spouse does not have to pay for the nursing home care of her institutionalized spouse is not enforceable when an application for Medicaid is made.
Question 6: How much income can I make and qualify for Medicaid?
The spouse of an individual who has established his or her eligibility for Medicaid is entitled to a monthly income not to exceed about $2500 per month.(Note: The dollar amounts on this Web page can and usually do change annually. You should not rely on these figures in your planning until you have verified the current figures.)
Question 7: Can I transfer my assets to my children just before I go into a nursing home and still qualify for Medicaid?
Answer: Probably not. Under the 60-month Look back Rule, eligibility for Medicaid may be denied if the person going into the nursing home transferred assets for less than fair market value within 60 months before his application for Medicaid benefits.
And be very careful about giving away assets: once you have given away your assets, you cannot get them back by legal action. Don’t rely on your children to “do the right thing” and hold the assets for you in case you need them. See Question 11 below and our “Pitfalls of Giving Away Your Home” for some good reasons why you should not give away your assets.
Question 8: If I am in the nursing home, is it too late to give away my assets and qualify for Medicaid?
Question 9: Should I use a trust to protect my assets?
Answer: Assets are usually transferred to children or other family members either outright or to a trust for your benefit. A trust can be more desirable than an outright transfer to a child because:
a) You may have a bad relationship now or in the future with:
1) your child or 2) your son-in-law or daughter-in-law
b) Your child may:
1) get divorced, 2) have creditors or go bankrupt, 3) invest your assets unwisely,
4) spend all of your assets during your life, or 5) spend all of your assets as soon as you die.
There are problems with the trust, however. You do not have access to the money in the trust. At most, only the income that the money or property in the trust earns can be distributed to you. The trustee of your trust must not have any discretion to distribute trust principal to you; otherwise the principal will be considered a resource for Medicaid purposes.
Question 10: Are there other ways to protect my assets?
Question 11: How can I protect my house?
Question 12: Isn’t it wrong to hide assets in order to qualify for Medicaid?
Answer: Hiding assets in order to qualify for Medicaid is a crime. That’s not what elder law attorneys who help their clients become Medicaid-eligible do. (If we did, we’d all be in jail as accessories to criminals.) The cardinal rule is full disclosure to the government’s Medicaid agency.
It is not illegal to structure one’s assets in an effort to qualify for Medicaid nursing home benefits. Elder law attorneys advise their clients on the Medicaid law and what can and cannot be done legally within the law. Some people, however, believe it is wrong to do legal Medicaid planning. That’s a different issue. See our “Is Medicaid Planning Ethical?” for more on this controversial subject.
Question 13: Can I rely on what you have written here about Medicaid law?
Question 14: Should I hire an attorney to help me?
Question 15: How do I find an attorney to help me?
Answer: Obviously, the attorneys here at the Elder Law Practice of Castiglia-Rubinstein & Associates can help — but we practice in New York only. The rules and how they are applied differ in other states.
Fortunately, with proper planning, you can qualify for valuable benefits and hold onto all or at least a substantial portion of your assets, life’s savings and income. If you need Home Care or Nursing Home Care and wish to apply for Medicaid Benefits, with proper legal advice, you will not be forced to spend down your income and your assets until you have practically nothing left. Obtain legal advice from a New York Elder Law attorney at Castiglia-Rubinstein & Associates to understand your options, and ask for a comprehensive Medicaid plan for you, to conserve your income and your savings call us today.
Our attorneys are not only trained in handling simple estate matters, we take care of complex medicaid planning and estate litigation in the event of the need for Medicaid Planning8 in Nassau County, Suffolk County, Queens County, Bronx, Westchester, Richmond County, Manhattan and Brooklyn Kings County New York.
Medicaid Planning Services
What you should do?
We believe the best solution is to bring together the family members, legal documents and financial information and analyze it in light of current Medicaid laws. Our Medicaid planning attorneys will then build a financial plan to maximize asset preservation in coordination with a long term care plan.
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1-800-960-1529 Call Today
You should be prepared if a loved is in need of in home care, going into a nursing home or already resides in a nursing home. You should know you have certain legal rights and must be very selective of the Lawyer or Law Firm that you chose to represent you. Have an Attorney council you on the Right Decision for You.