by Mike Bascom
Trap #1: Thinking it’s too late to plan.
It’s almost never too late to take planning steps, even after a senior has moved into a nursing home.
Trap #2: Giving away assets too early.
First, it’s your money (or your house, or both). Make sure you can take care of yourself first. Don’t put your security at risk by putting it in the hands of your children. Precipitous transfers can cause difficult tax and Medicaid problems as well.
Trap #3: Ignoring important safe harbors created by Congress.
Certain transfers are allowed without jeopardizing Medicaid eligibility. These include: transfers to disabled children, caretaker children, certain siblings and into trust for anyone who is disable and under the age of 65; a transfer to a “pay-back” trust if under age 65; and a transfer to a pooled disability trust at any age.
Trap #4: Failing to take advantage of protections for the spouse of a nursing home resident.
These protections include the purchase of an immediate annuity, petitioning for an increase in community spouse resource allowance, and in some instances petitioning for an increase income allowance or refusing to cooperate with the nursing home spouse’s Medicaid application.
Trap #5: Applying for Medicaid too early.
This can result in a longer ineligibility period in some instances.
Trap #6: Applying for Medicaid too late.
This can mean the loss of many months of eligibility.
Trap #7: Not getting expert help.
This is a complicated field that most people deal with only once in their lives. Tens of thousands of dollars are at stake. It’s penny wise and pound foolish not to consult with people who make their living guiding clients through the process.
Trap #8: Confusion about the difference between lifetime liens on property and estate recovery.
There are a number of exceptions to lifetime liens on property, but for estate recovery there is only a deferral for a surviving spouse and a hardship waiver.