Proving a Transfer was Made for a Purpose Other Than to Qualify for Medicaid
Medicaid law imposes a penalty period if you transferred assets within five years of applying, thus increasing your burden to pay for long-term care. But what if the transfers had nothing to do with Medicaid? It is difficult to do, but if you can prove you made the transfers for a purpose other than to qualify for Medicaid for long-term care (LTC), you can avoid a penalty.
HOW THE ASSET-TRANSFER PENALTY WORKS
You are not supposed to move into a nursing home on Monday, give all your money away on Tuesday, and qualify for Medicaid on Wednesday. So, the government looks back five years for any asset transfers and levies a penalty on people who transferred assets without receiving fair value in return. This penalty is a period during which the person transferring the assets will be ineligible for Medicaid. The penalty period is determined by dividing the amount transferred by what Medicaid determines to be the average private pay cost of a nursing home.
The penalty period can seem very unfair to someone who made gifts without thinking about the potential for needing Medicaid. For example, what if you made a gift to your daughter to help her through a hard time? If you unexpectedly fall ill and need Medicaid to pay for long-term care, the state will likely impose a penalty period based on the transfer to your daughter.
PROVING A REASON OTHER THAN SPENDDOWN
To avoid a penalty period, you will need to prove that you made the transfer for a reason other than qualifying for Medicaid. The burden of proof is on the Medicaid applicant and it can be difficult to prove. Evidence of intent other than to qualify for Medicaid can include: the applicant’s good health at the time of the transfer; or her established pattern of charitable giving; or that there were plenty of other remaining assets at the time of the gift; or that the gift was made for estate planning purposes on the advice of an accountant.
Proving a transfer was made for a purpose other than to qualify for Medicaid is difficult but not improbable. There are little-known strategies available to reduce your financial burden for nursing home expenses of $8,000 (or more) per month, but only with the personal guidance of a qualified Medicaid planning professional.
OTHER IMPORTANT ESTATE PLANNING STRATEGIES
- There are substantial differences between wills and trusts that most people fail to consider or even understand. Worse yet, do-it-yourself and online documents simply give you the tools to commit moral malpractice. A plan, tailored to your specific objectives, takes time with the guidance of an experienced professional.
- A properly drafted and up-to-date power of attorney gives your designated decision makers sufficient authority to handle your affairs during incapacity and avoid conservatorship court proceedings when banks and other institutions will otherwise decline to cooperate. And they can help to avoid spending all your assets to pay for LTC even after you go into nursing home.
- The remarriage of a surviving spouse oftentimes results in a disinheritance of children and beneficiaries of the first spouse to die. Most people don’t even consider this possibility. With proper “remarriage protection,” it can be completely avoided.
- Outright distributions to children or other beneficiaries are likely to result in losing an inheritance to divorce, creditors, predators, or destructive personal habits. This can be prevented with the use of continuing trusts tailored to the needs of your beneficiaries.
- With a carefully designed, advance plan customized to address your specific objectives and circumstances, you will achieve lifetime protection and peace of mind. Procrastination is your enemy so get started today.
HELP FOR YOU
There are resources available that families can use to deal with these deeply complex issues. Local workshops by estate planning professionals, such as the Wesolick Law Firm, are available to pre-qualified individuals addressing the most comprehensive and modern strategies to provide security for you and your family. These workshops are informative and sign-ups are available now, followed by individualized no-obligation consultations to evaluate your unique estate planning needs and solutions.
Call (605) 721-7665 to register for a FREE workshop
Wills, Living Trusts, and Estate Planning
Thursday, May 10 or Tuesday, May 15 starts at 5:30 pm
Seating is Limited