Protecting Your Assets from Medicaid through Estate Planning
The idea that estate planning involves asset protection is somewhat common. To be sure, many New Jersey residents work with an estate planning lawyer to make sure that their assets are inherited by the family members or entities of their choosing, or to minimize estate taxes when it comes time for their estate to be administered. Yet another crucial component of estate planning and asset protection involves Medicaid planning. You might not even be thinking about the possibility of needing to become eligible for Medicaid — this public benefit provides medical care for those with limited resources. Yet for a majority of older adults who need long-term care in a nursing home, it is critical to be eligible to have Medicaid cover long-term care in order to avoid having to spend a substantial portion of savings or other assets to pay for a nursing home stay.
What do you need to know about protecting your assets from Medicaid through estate planning? Our experienced New Jersey estate planning attorneys can explain in more detail.
Purpose of Medicaid Planning
The purpose of Medicaid planning is to find a way (or ways) for you to become eligible for Medicaid coverage for long-term care in a nursing home so that you do not have to pay for extremely costly nursing home care out of pocket. In other words, in Medicaid planning, you can develop strategies with your estate planning lawyer to protect your assets from going toward long-term care payments while still becoming eligible for Medicaid coverage.
Through Medicaid planning, you can often avoid having to spend down your assets, and you can plan in a way that will not put you at risk of a penalty for transferring assets during Medicaid’s “lookback period” (where Medicaid looks to see if you transferred assets to avoid using them to pay for long-term care). There is a five-year “lookback period” in New Jersey.
Options for Protecting Your Assets and Being Eligible for Medicaid
There are various ways that an estate planning attorney can help you to protect your assets while taking steps to ensure that you will be eligible for Medicaid coverage for long-term care if you or your spouse require it. To be eligible for Medicaid, you must have a limited amount of “countable” assets and income.
One option is to set up a Medicaid Asset Protection Trust, which will involve placing your “countable” assets (for Medicaid purposes) into the trust. While the trust must be established as an irrevocable trust, you can still protect family assets while ensuring that Medicaid will cover long-term care.
Another option is to convert countable assets to assets that are not countable. For example, you may be able to make plans to use countable assets to make necessary upgrades to your home — your home is typically not a countable asset if you plan to return to it after receiving nursing home care, or if your spouse remains in the home. There are numerous other asset protection strategies, as well, which a lawyer can discuss with you based on your specific financial circumstances.
Contact a Summit, New Jersey Estate Planning Attorney for Assistance Today
Medicaid planning, and considering other asset protection strategies, should be an important component of estate planning in New Jersey for most people. While the need to pay for long-term care may not arise until you are older, the best way to protect your assets is by ensuring that you have planned ahead. One of the experienced Summit estate planning lawyers at Dempsey, Dempsey & Sheehan can speak with you today about asset protection and Medicaid planning services we provide. Contact us to learn more about how we can help you with these matters and other estate planning issues.
Source:
law.justia.com/codes/new-jersey/title-3b/
