Medicaid Asset Protection

As tax preparation time begins, numerous seniors are asking to include Medicaid asset protection as component of their tax planning tactics. For those of you not familiar with the 2005 Tax Reduction Act, some of the provisions address specific transfers by seniors below the new Medicare nursing house provisions. Beneath the new provisions, before a senior qualifies for Medicare assistance into a nursing home, they need to spend-down their assets. These new restriction have a 5 year look-back, used to be three years. And employed to be that each report medical fraud spouse had a a single-half interest in the marital property, it now appears that all the marital assets are to be spent-down. I have not seen particular regulations but it appears that the healthy spouse will be left without having any assets if one of them gets sick.

Ideas by seniors have been to transfer their assets to their young children. Though this option is available, Im not certain that its a excellent choice. What if the kid decides to use the asset for themselves, what if they get divorced and the judge awards assets originally intended for the parents to the divorcing wifes decree, what if the youngster gets sued?

There are also tax implications. If the assets are transferred to the child for much less than fair market place value, then its a taxable gift. Even worse, if this kind of transfer to the kid is what is medicare fraud completed ahead of the five years-appear back, -is it a fraudulent conveyance?

Medicaid asset protection has to be carried out quite cautiously. Planning in this area is evolving. There are a lot of eldercare law firms popping up all over the spot. I have been approached by such a firm to send them customers. They claim that they can structure a new deal whereby the nursing house wont be in a position to attach assets even immediately after they enter the nursing home.

I know this a lot, any strategy used to deflect assets from the original owner has to be completed at its fair market place value. For example you just cant transfer your residence from you to your youngster. There are tax consequences. Did you just sell your property? Or did you just gift your property? Who will determine the fair industry value? Did you get a genuine appraisal? If as a result, its at less than fair market value (willing buyer and willing seller, neither under compulsion to purchase or sell, each acting in their very best interest) did you just generate a a lot more difficult difficulty?

Any strategy whereby theres an element of strings attached, its revocable and therefore you have completed nothing to disassociate your self from your asset. A single can challenge your intent, to divert assets for the objective of defrauding a prospective creditor and failure to have filed a gift tax return has statutory penalties, and interest, worse- if Medicare intended, criminal?

I am conscious of only one technique of disassociating oneself from your asset (private residence, your CDs, your investments, vacation spot) is to give it away. Period. You can gift it to your kids, pay the tax and thats it. The issue is that you no longer have any manage and you are at the mercy of your childs very good intentions and a blessed spouse. Risky? You what is medical fraud bet!

An irrevocable trust with an independent trustee (not associated to you by blood or marriage) will fit the bill.

An irrevocable trust, is an irrevocable contract between you and the independent trustee to manage the assets for the benefit of all beneficiaries. You and your spouse can turn into beneficiaries along with your youngsters and grand kids.

Timing is very critical. If the transfer (repositioning) of your beneficial assets is carried out ahead of the 5 years, chances are very good that it will stand-up in court. What if its ahead of the five years are up? Is your Medicaid asset protection program nonetheless great? In my book its greater to have done a thing than nothing.