Medicaid planning: Protecting the house and Medicaid eligibility

by | Sep 11, 2018 | Firm News |

When it comes to end-of-life planning, one of the most valuable resources many seniors in New Jersey can rely on is Medicaid planning. Whether you plan to retire in a few years or are in the process of updating your estate plans, one item you should dedicate a little more time on is your home. 

By anticipating your need for specific resources to ensure your standard of care, you can minimize the financial issues you and your loved ones may encounter otherwise. With proper planning, you do not have to choose between keeping your home in the family and losing your Medicaid eligibility. Here is some information to keep in mind about Medicaid planning and real estate

The house can affect Medicaid eligibility 

It is possible for you to give a family member your home and allow you to remain in it until you need nursing care. However, if something happens to that person or he or she does not follow your plan, the situation could affect your Medicaid eligibility. 

For example, a 65-year old mother gives her home to her adult daughter so she can continue living in it without having it as an asset. If her daughter is married and gets a divorce, she could lose the home, and the mother would have to deal with living arrangements and the finances that come with it. Complications can also arise if the daughter sells the property or dies. 

There is also the possibility of mom becoming ill or seriously injured and needing nursing home care. If she plans to use Medicaid, the property would need to be gifted back, or she could incur a Medicaid penalty because of the five-year look-back rule

Careful planning preserves Medicaid eligibility 

The above example is a common situation for many seniors and their families. When planning your estate, you must consider potential issues that could impact your financial and medical care needs at the end of your life. Even if you do not plan to use Medicaid for your nursing home expenses, it is a good idea to learn the rules and structure your estate plans accordingly. Change is often unavoidable and sometimes unexpected. 

You might benefit from placing your property into a trust and learning all you can about Medicaid planning and its five-year look back period, so you have favorable options to protect your assets and yourself should the need arise near the end of your life.