How can you reduce assets?

On Behalf of | Feb 16, 2023 | Care Planning |

If you’re planning to use Medicaid benefits as a way to get the care that you need as you age, it may be necessary to reduce the amount of assets that you have. You’ll need to meet various limits concerning assets and income before you will qualify for these benefits.

This reality can become problematic if you have too many assets to qualify for benefits but you do not have enough assets to actually pay for the care that you need on your own. Here are a few ways that you may be able to minimize your assets to better ensure that you’ll qualify for Medicaid benefits when you apply.

Spending down your assets

One option is simply to spend down assets or income on outstanding debts that you already have. Instead of just paying monthly minimums on a mortgage or a car loan, for example, you could spend your income paying off the balances. Many people will also pay for previous medical bills that they already owe when minimizing assets.

Putting assets in a trust

Another option may be to start looking into estate planning options. You could transfer some of the assets that you own into a trust, which will be set aside for a specific heir. As long as the money is in the trust, you will not own it and neither will your heir – at least, not technically. It is the property of the trust itself, so you do not have to spend that money down before you qualify for benefits. The trust can then authorize certain uses for your heir, such as paying for educational costs.

If you’re trying to qualify and looking for ways to do it, be sure you understand all the legal options at your disposal and that you carefully research the pros and cons of each before committing to a plan of action.