Why Do You Need To Think About Estate Planning For Medicaid?

If you or a family member expect to go on Medicaid, you need to think about estate planning. Even though many people think about estate planning as something for rich people, the Medicaid rules can drain any family's assets if you aren't careful. Here are the estate planning moves you should consider before going on Medicaid. 

What Are the Medicaid Rules? 

There are two main types of Medicaid rules.

The asset limits say that if you own more than a certain amount, you have to liquidate assets before going on Medicaid. Medicaid is only intended to be used after you exhausted your financial resources. The asset limits vary by where you live because they're based on the local cost of living or poverty level.

The asset tests determine which assets are included for the purposes of determining the asset limits. There are different rules for different types of assets depending on whether they are essential items or not. For example, you can usually keep your home, car, and household items like furniture as long as their value doesn't exceed a certain amount. For other items, like antiques and jewelry, you will usually need to sell them if they place you over the asset limits.

What Does Estate Planning for Medicaid Do?

The purpose of using estate planning for Medicaid is to find ways to legally keep more of your assets in your family instead of needing to sell them to qualify for Medicaid. Your estate planning lawyer can do things like change the legal ownership of various items so that they don't fall under the Medicaid asset limits.

How Can an Estate Planning Lawyer Protect Your Assets?

The most common move an estate planning lawyer can make to prepare you to qualify for Medicaid is to move assets into a trust. A trust is a special estate planning tool that allows you to continue your assets but automatically passes them to named family members when you die. Unlike a will, trust assets aren't part of your estate and don't go through probate.

Since you no longer have clean ownership of the assets in your trust and your designated beneficiary has the right to receive the assets from the trust, they aren't counted as part of your assets for the purposes of Medicaid limits.

To learn more about the estate planning moves you can make before applying for Medicaid, talk to a local estate planning lawyer today.

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