Planning for the chance that you need long-term health care is among the most complicated of all estate planning tasks. Get it wrong, and you could see your entire estate disappear into the hands of health care providers, leaving nothing for your children.
Medicaid can claim against your estate after you die
If you drain funds set aside for health care, you might be eligible for Medicaid. However, this is not as cost-free as you may think. The laws aim for Medicaid to recover as much money as possible from your estate once you die.
How can you avoid Medicaid seizing your estate?
There are three ways to avoid Medicaid authorities taking your assets after you die:
- Die before you reach 55 years old: Medicaid can recover for all costs incurred from the day you turn 55 onward. So dying aged 54 would protect your estate.
- Give away your assets at least five years before you die: Medicaid has the right to claim any property you hold on death to pay your bills. To avoid the chance that people give all their assets away when they realize they are about to die, Medicaid applies a five year look back rule. That means they can still take anything you gave away within the last five years.
- Careful use of estate planning tools: As the first two options require psychic powers to predict when you will die, your best bet is efficient estate planning. There are certain types of trusts available designed to protect your home and other assets from Medicaid recovery.
Medicaid has far-reaching powers of recovery. They can claim a wide range of assets, including your home, life insurance policies and many trusts. It takes knowledge and experience to design an estate plan that can protect your estate from Medicaid’s grasp.