Individuals preparing for retirement usually need to think carefully about their comfort as they age, and also the legacy that they’ll leave after they die. The plans they establish early in retirement can help protect them and the people they love.
Many people preparing for retirement decide to review and expand their estate plans. For example, they may create a Medicaid plan to help ensure they can qualify for benefits if their health declines significantly later in life.
Medicaid has notoriously strict limits on both countable assets and personal income. The state also looks at five years of financial records in addition to someone’s current circumstances. Those with limited personal resources and minimal income may take for granted that they can qualify for Medicaid when they need benefits. What they may fail to consider is the impact benefits could have on their legacy. Their home can be at risk after they die.
Non-countable assets are vulnerable to recovery efforts
When the state looks at an applicant’s finances, they look at income and assets that the individual can use to support themselves. The contents of their bank accounts can prevent them from qualifying. The home equity they have accrued typically does not.
Applicants can secure Medicaid even if they have a home with no mortgage attached. However, if they rely on long-term care benefits as a homeowner, their residence is at risk after they die. The New Jersey Medicaid estate recovery program can make a claim against any property that becomes part of an individual’s estate after their passing.
Even their home, which did not count against them when they applied, could be vulnerable to estate recovery efforts. Advanced planning such as recording a deed to add a co-owner or transferring the home to a trust can theoretically help people qualify quickly for Medicaid when they need benefits while also protecting their legacy after their passing.
Realizing that Medicaid planning is important both for an older adult’s comfort and for the legacy they want to leave for others can help people prepare themselves and their resources for the challenges of retirement. Proper Medicaid planning helps people obtain benefits if their health declines and preserve resources they want to pass on to their loved ones after they die.
