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Medicaid planning is an important part of estate planning

On Behalf of | Dec 31, 2018 | Medicaid Planning

The will has been drafted, trusts have been created and the estate plan is in place. Once each of these items is taken care of, the Colorado resident may believe that he or she has adequately protected his or her family and estate. Yet, if Medicaid planning has not been included in this process, both could be left vulnerable.

Nursing home care is expensive and can quickly deplete one’s estate thus drastically altering what you anticipated leaving to your loved ones. Fortunately, Medicaid can cover nursing care expenses; however, Medicaid does have specific requirements that must met before you can be eligible.  An individual applying for Medicaid benefits has to first meet specific income and asset requirements.

At first glance, you might assume that simply transferring assets to another family member will solve the asset dilemma; it won’t. In fact, in order to discourage gifting, Medicaid has a five-year look-back rule. This means that Medicaid may review all financial transactions involving the applicant for a period of five years prior to the application date.  If gifts have been made during that period of time, Medicaid can impose a period of ineligiblity for Medicaid benefits. 

In order to preserve one’s assets and estate, Medicaid planning should be an integral part of the estate planning process. There are ways to structure the ownership of assets to preserve them should long-term care be required. However, this does require prior planning.  The Medicaid regulations governing income and assets, gifting and estate recovery are very complex.  It is therefore important for the Colorado resident to retain experienced legal counsel as they add this planning component to their traditional estate plan.