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How to Protect Assets From Medicaid Recovery

Avoiding Medicaid estate recovery of your home should be an important priority of a well-crafted Estate Plan. By using sophisticated estate-planning tools, an experienced Elder Care and Estate Planning lawyer can help protect your house, prevent Medicaid from forcing its sale, and enable your heirs to enjoy it. That’s why below you’re going to learn about 3 techniques that can help protect your assets from Medicaid recovery.

What is Medicaid Recovery?

Medicaid may be able to force your heirs to sell your house to reimburse the state for your the benefits you received because when the state pays for care, including nursing home care and other Medicaid-covered services, it treats the benefits like a debt that, in some cases, must eventually be repaid. 

With only a few exceptions, Medicaid will only attempt to seek reimbursement for the services paid after you pass. Afterwards, the state may seek to recover the benefits by filing a claim against your estate. This is known as “estate recovery.” The benefits Medicaid may seek to recover can be worth as much as hundreds of thousands of dollars.

3 Ways to Prevent Medicaid Recovery

1. Put your house in an irrevocable trust

In Florida, Medicaid can only go after assets that pass through probate. One way of keeping your home out of probate is to put it into an irrevocable trust. The trust must be irrevocable; a revocable trust will not protect your home from Medicaid estate recovery. These trusts, often called Medicaid Asset Protection Trusts (MAPTs), must be set up early, several years before you start receiving Medicaid benefits. 

2. Set up a life estate

With a life estate, you transfer the ownership of your house to another person or to more than one person, but you retain the right to live in the house for the rest of your life as a “life tenant.” Your house won’t go through probate if you grant a life estate deed, and Medicaid won’t be able to take it. Like the irrevocable trust, a life estate should be planned in advance, before Medicaid starts providing benefits.

3. Use a Lady Bird deed

Another way of protecting your home from Medicaid estate recovery is to use a Lady Bird deed. This type of deed (named after the wife of President Lyndon Johnson) is similar to a life estate, but it gives more rights to you, the life tenant. You will retain the right to sell or mortgage the property, and you will also receive some tax advantages. Like a traditional life estate, a Lady Bird deed will keep your house out of probate and prevent it from being sold by Medicaid. Like the other Estate Planning tools mentioned here, a Lady Bird deed needs to be planned in advance.

Seek Professional Guidance

The Siegel Law Group specializes in Elder Law and Medicaid planning. Reach out to us today and let us help you protect your house and other assets from Medicaid estate recovery by setting up a proper Estate Plan. Call us today for a complimentary consultation at (561) 955-8515, or contact us through our website for more information.

Barry Siegel is the founder and managing partner of The Siegel Law Group, P.A., a Law Firm in Boca Raton, Florida that focuses on comprehensive Estate Planning and Elder Law Planning for clients throughout South Florida. The Siegel legal team is dedicated to providing compassionate counsel and effective legal representation in matters pertaining to Estate Planning, Elder Law, Probate and Trust Administration, Asset Protection Planning, and much more. Subscribe to our newsletter for the most current legal news and updates.

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