Medicaid Asset Protection

As tax preparation time begins, a lot of seniors are asking to include Medicaid asset protection as element of their tax preparing strategies. For those of you not familiar with the 2005 Tax Reduction Act, some of the provisions address precise transfers by seniors beneath the new Medicare nursing house provisions. Beneath the new provisions, prior to a senior qualifies for Medicare assistance into a nursing residence, they ought to spend-down their assets. These new restriction have a 5 year appear-back, used to be three years. And used to be that every spouse had a 1-half interest in the marital property, it now appears that all the marital assets are to be spent-down. I have not seen certain regulations but it appears that the healthy spouse will be left without any assets if a single of them gets sick.

Suggestions by seniors have been to transfer their assets to their young children. Although this choice is obtainable, Im not certain that its a good option. What if the kid medicare fraud laws 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 child gets sued?

There are also tax implications. If the assets are transferred to the youngster for less than fair industry value, then its a taxable gift. Even worse, if this type of transfer to the child is completed just before the 5 years-look back, -is it a fraudulent conveyance?

Medicaid asset protection has to be accomplished really cautiously. Planning in this area is evolving. There are a lot of eldercare law firms popping up all more than the location. I have been approached by such a firm to send them clientele. They claim that they can structure a new deal whereby the nursing residence wont be in a position to attach assets even following they enter the nursing house.

I know this considerably, medicare fraud laws any approach used to deflect assets from the original owner has to be accomplished at its fair market place worth. For example you just cant transfer your residence from you to your youngster. There are tax consequences. Did you just sell your house? Or did you just gift your residence? Who will figure out the fair marketplace value? Did you get a genuine appraisal? If for that reason, its at much less than fair marketplace worth (willing buyer and prepared seller, neither beneath compulsion to purchase or sell, each and every acting in their greatest interest) did you just produce a far more difficult dilemma?

Any approach whereby theres an element of strings attached, its revocable and therefore you have done absolutely nothing to disassociate your self from your asset. One particular can challenge your intent, to divert assets for the purpose of defrauding a potential creditor and failure to have filed a gift tax return has statutory penalties, and interest, worse- if Medicare intended, criminal?

I am aware of only one method of disassociating your self 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 difficulty is that you no longer have any control and you are at the mercy where to report medicare fraud of your childs great intentions and a blessed spouse. Risky? You bet!

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

An irrevocable trust, is an irrevocable contract among you and the independent trustee to manage the assets for the benefit of all beneficiaries. You and your spouse can turn out to be beneficiaries along with your youngsters and grand young children.

Timing is really crucial. If the transfer (repositioning) of your valuable assets is accomplished ahead of the 5 years, chances are very good that it will stand-up in court. What if its prior to the 5 years are up? Is your Medicaid asset protection plan nonetheless very good? In my book its greater to have completed some thing than absolutely nothing.