Authored by Athena Nagel
There comes a time in a person’s life when they will no longer be able to take care of themselves, so preparing for long-term care is essential from an early age. Moreover, it is estimated by the CDC that more than half of the elderly population today will require some type of assisted living or long-term care in the future making it crucial to protect their assets from Medicaid.
So, one must start planning how they will cover the cost of their care and living expenses from an early age.
In Texas alone, more than one hundred and fifty thousand beds are available in approximately 1300 facilities. As of now, more than a hundred thousand people reside in such facilities in Texas.
While many people have Medicaid to support them, one of its limitations is that the government will collect the amount spent on your healthcare from your remaining assets. So, you need Medicaid asset protection, and you need expert Medicaid asset protection planning in Texas to safeguard your financial interests.
Here are some of the strategies you can opt for to protect your assets.
- Asset protection trust
A trust is a legal tool that is beneficial in multiple scenarios. If you think that simply transferring any assets to the family or friends will protect them from Medicaid recovery, you couldn’t be more wrong, as you could still be charged with a Medicaid penalty for doing it this way.
However, with a well-designed trust in place, your assets will be distributed among your beneficiaries with a ‘step-up’ to adjust for fair market value. This way, your beneficiaries will not have to pay any tax on capital gains on the trust’s value increment.
Moreover, when you carefully design trust for asset protection, the assets you have transferred into your trust no longer belong to you, putting them out of reach for Medicaid recovery and other types of creditors. However, transfers to a trust can also observe a Medicaid’s look-back period.
This is why you need expert Medicaid asset protection planning in Texas: to ensure you set your Trust up the right way to ensure your assets are protected and go only to the intended beneficiaries.
- Income trusts
A strict income limit is enforced when you are applying for the benefits of Medicaid. However, if you manage the funds carefully, you can still reap the benefits of Medicaid while having an excessive income than the stipulated amount. To do this, people form pooled income or qualified income trusts.
A qualified income trust is set up to store a part of your income more than the mentioned income limits for Medicaid. On the other hand, pooled income trusts function similarly but are specially designed for disabled individuals.
- Promissory notes and private annuities.
As per the criteria of Medicaid, you will be penalized if you transfer your assets during the lookback period. So, you can form a promissory note or structured private equity to safeguard a steady cash flow that you can use to pay for assisted living.
Getting expert asset protection planning and assistance from trusted lawyers in Texas can help you avoid such penalties.
If you wish to obtain services that are not covered by Medicaid, setting up a caregiver agreement is another viable option. In such agreements, a family member would often leave their full-time job to act as a caregiver to the older person. However, certain eligibility criteria must be met in the caregiver agreement for it to be accepted by Medicaid.
Certain states have different requirements for such agreements, so it is important that you seek counsel from an expert in Medicaid asset protection planning in Texas.
These legal maneuvers can help you protect your assets and safeguard the financial interests of your beneficiaries.