How Do I Protect my Assets From Medicaid? (Video)

One of the most common questions I am asked is how do I protect my assets against Medicaid?

Hi, I’m Gary, the owner of Dewitt law firm and we’re with you every step of the way.

Protecting your assets against Medicaid is at the best difficult.

Medicaid has stacked the deck in their favor, but if you have some time to plan, we can protect your assets against Medicaid.

How do I Protect My Assets?

The way you protect assets against Medicaid is literally to give them away. But we do that in a controlled way so that you maintain some income and control over the money possible of course.

One way is to give the money away as a gift. You can give away up to $15,000 per person per year without having to file a tax return. Even if you give away more than that the gift tax this year starts at 12 million dollars, but you can give away up to 12 million dollars without paying a penny in estate or gift tax.

However, if you do give away more than $15,000 to a person, you will have to file a gift tax return.

Once money is given away. It’s out of your control and Medicaid Cannot recover against it.

The second way is to use an irrevocable trust. Once the money or property is put into the trust it can’t come out. The only caveat to this is you or your spouse cannot be the trustee. A trustee can be a child and they can be instructed to use the money for your benefit if you do have to go into a nursing home.

The Catch

The catch to all of these methods is the Medicaid gifting penalty.

You need 5 years to make any of this work. If you do it within the 5 year period of time, then Medicaid will calculate a penalty based on the amount of the gift given and make you pay for that many months of nursing home care out of pocket.

Emergency Planning

As we get closer and closer to what we call emergency Medicaid planning, we can protect some assets by turning them into loans or annuities or otherwise turning assets into income.

That’s a very advanced topic and I’m not going to get into a lot of details here.

But if you find yourself in the position of a loved one needing nursing home care within say the next 90 days, it’s better to come in and plan out even if they end up recovering and going home because it does. Take some time to get all of this done.

I’m Gary Dewitt with the Dewitt law firm and we’re with you every step of the way.