Can Medicaid Asset Protection Save Your Family Home?

Medicaid asset protection is something everyone should be considering as they approach old age. In fact, the sooner you consider it the better. If you have children, you will want your assets to pass to them rather than to the state to pay for long term medical care. This can be in danger if your asset level is high enough to make the authorities take an interest in you. If you own a home, even jointly with a marriage partner, you are especially vulnerable. You don't need to be among the ranks of the super rich to benefit from sensible asset planning.

The whole issue of asset protection is becoming studied by ever greater numbers of people, as inflation pushes more family homes into a price bracket where they could be vulnerable. Protecting a home in this way is becoming an essential part of preparing for retirement. This type of planning is possible because of the law which allows a citizen of any state to form a trust or company in any other state, or even in an overseas jurisdiction. This effectively gives the citizen the right to shop around for the most favorable terms for the financial instruments they need.

The governments of the world have been desperately cracking down on the ability of citizens to move money to overseas jurisdictions and cover it up completely. Part of the reason for this is obviously to combat drug trafficking and terrorist activity which was able to use these provisions to evade capture, but another part is simply to avoid the loss in revenue which comes from people being able to legally avoid taxation. You can still move money overseas, but it needs to be declared. You can also set up similar arrangements in a different state.

If you are setting up arrangements purely to avoid future medicaid issues, you basically have two choices. You can gift assets to your family using a family limited partnership, which can reduce the amount of inheritance tax you will need to pay. The asset will then belong to the other member of your family, and be safe from medicaid considerations. If you choose this route, make sure the gifting occurs long before there is any possibility of you needing long term care.

The other possibility in medicaid asset protection is simply to set up a trust, and divert some of your assets into that. This is something which needs to be done in the right way, as there are so many potential traps waiting for the unwary. The earlier this type of arrangement is started, the better, because it guards against the possibility of you being challenged for deliberately avoiding contributions to care. A lawyer will be needed to draw up the plans, preferably a specialist in medicaid asset protection.






 

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