How much can Medicaid take from someone’s estate?

On Behalf of | Aug 4, 2023 | Medicaid Planning And Asset Protection |

People don’t like to think about needing Medicaid benefits as they get older. Many individuals associate Medicaid with poverty and with a loss of control over their assets. However, the truth is that Medicaid benefits are necessary for many older adults as their support needs become more significant with age.

Although advance planning makes it easier for someone to qualify for benefits as they age, many people put off this process because they wrongfully believe they will lose control of their assets if they engage in Medicaid planning. Proper planning can protect people’s assets while preserving their control over them, while failing to plan might result in the liquidation of someone’s resources to pay back any benefits they receive.

How much might Medicaid claim from someone’s estate if they don’t plan in advance?

Every last asset is vulnerable to recovery efforts

When applying for Medicaid, there are certain assets that won’t prevent someone from qualifying for benefits. For example, regardless of what someone’s primary residence is worth, its value generally won’t interfere with someone’s eligibility for Medicaid.

However, that real property could be vulnerable to forced sale after someone’s death. Even if their home is the only asset they have to pass on to their children, the New Jersey Medicaid recovery program could demand the liquidation of the home so that the state can lay claim to whatever equity someone has accrued in the home. Other assets, ranging from bank accounts to vehicles, will also be at risk of liquidation even if someone has selected specific beneficiaries to receive those assets.

Advanced planning can preserve personal resources

Those who believe they may eventually require Medicaid benefits can plan ahead to preserve some of their property even after they die. Those hoping to qualify for Medicaid quickly and preserve their assets later might create a trust specifically for that purpose. Assets in a trust will not become part of someone’s estate and can therefore pass to selected beneficiaries after their death. The testator can potentially retain control over those assets while they are still alive as well, which can be very important for someone’s comfort and financial stability in their golden years.

Those who take the time to plan ahead will make it easier for themselves to get the support they need as they age and will also have a better chance of leaving a meaningful legacy for the people they love when they die. Understanding what assets are at risk to estate recovery efforts can lead to more informed estate planning efforts for those thinking about their future medical needs and related long-term impacts on loved ones.