Medicaid Asset Protection

As tax preparation time begins, several seniors are medicare medicaid billing asking to include Medicaid asset protection as part of their tax preparing methods. For those of you not familiar with the 2005 Tax Reduction Act, some of the provisions address specific transfers by seniors beneath the new Medicare nursing property provisions. Below the new provisions, just before a senior qualifies for Medicare assistance into a nursing residence, they ought to invest-down their assets. These new restriction have a 5 year appear-back, used to be 3 years. And utilized to be that each spouse had a 1-half interest in the marital property, it now appears that all the marital assets are common types of fraud to be spent-down. I have not observed precise regulations but it appears that the healthful spouse will be left with no any assets if one of them gets sick.

Ideas by seniors have been to transfer their assets to their young children. Although this option is obtainable, Im not positive that its a very good alternative. What if the child decides to use the asset for themselves, what if they get divorced and the judge awards assets originally intended for the parents to the divorcing wifes decree, what if the child gets sued?

There are also tax implications. If the assets are transferred to the youngster for much less than fair market place worth, then its a taxable gift. Even worse, if this kind of transfer to the child is completed ahead of the five years-look back, -is it a fraudulent conveyance?

Medicaid asset protection has to be accomplished really meticulously. Organizing in this area is evolving. There are a lot of eldercare law firms popping up all more than the location. I have been approached by such a firm to send them customers. They claim that they can structure a new deal whereby the nursing property wont be able to attach assets even following they enter the nursing house.

I know this a lot, any strategy used to deflect assets from the original owner has to be accomplished at its fair market place worth. For example you just cant transfer your home from you to your youngster. There are tax consequences. Did you just sell your house? Or did you just gift your residence? Who will decide the fair marketplace worth? Did you get a genuine appraisal? If for that reason, its at much less than fair market worth (willing buyer and willing seller, neither beneath compulsion to purchase or sell, every acting in their best interest) did you just medicare fraud reward develop a more challenging dilemma?

Any method whereby theres an element of strings attached, its revocable and as a result you have carried out nothing to disassociate your self from your asset. One particular can challenge your intent, to divert assets for the objective of defrauding a potential creditor and failure to have filed a gift tax return has statutory penalties, and interest, worse- if Medicare intended, criminal?

I am conscious of only 1 strategy of disassociating oneself from your asset (private residence, your CDs, your investments, vacation spot) is to give it away. Period. You can gift it to your kids, spend the tax and thats it. The problem is that you no longer have any control and you are at the mercy of your childs good intentions and a blessed spouse. Risky? You bet!

An irrevocable trust with an independent trustee (not related to you by blood or marriage) will fit the bill.

An irrevocable trust, is an irrevocable contract in between you and the independent trustee to manage the assets for the benefit of all beneficiaries. You and your spouse can grow to be beneficiaries along with your kids and grand children.

Timing is incredibly essential. If the transfer (repositioning) of your useful assets is completed before the 5 years, probabilities are good that it will stand-up in court. What if its prior to the five years are up? Is your Medicaid asset protection strategy nevertheless great? In my book its far better to have accomplished some thing than nothing.