Ten Common Asset Preservation Mistakes

Ten Common Asset Preservation Mistakes

  1. Transferring all assets to children or other relatives. This almost always results in a penalty period of ineligibility that begins after application for Medicaid and other public assistance. Tax consequences can be significant. Make gifts only with legal counsel.
  2. Selling the family home to pay for nursing home costs. This is often not required, yet many still believe that the home must be sold to pay for care.
  3. Relying only on a will or living trust. A will has no effect until approved in probate proceedings after death. A living trust is preferable in most cases, but generally does not protect assets from government claims for payback.
  4. Relying on Medicare or health insurance. Neither one pays for the cost of long terms care in a nursing home or assisted living. Costs typically run between $5000 and $6000 and most families will quickly run through their life savings.
  5. Putting a family member on accounts as a joint owner. This subjects the account to the risks associated with the joint owner’s life – divorce, bankruptcy, lawsuit. This can also result in disqualification periods for Medicaid eligibility. There are better ways to avoid these legal problems.
  6. Using a pre-printed form for power of attorney. These documents may be useful for small accounts and simple transactions but usually lack the express language needed for more complex affairs and for Medicaid eligibility transactions. Have one prepared for your situation by an elder law specialist.
  7. Using a form will or living trust. These are cheap and available from bookstores and internet. But they are almost always not suitable or correct for your situation. Lawyers earn substantial fees “fixing” these do-it-yourself wills and trusts.
  8. Purchasing a “Medicaid annuity” or other financial products to shelter assets. Use caution when relying on the advice of “senior advisors” who may not understand your situation.
  9. Applying for a guardianship or conservatorship. These proceedings to handle a person’s incapacity are costly, time-consuming and restrictive. With proper planning, these can be avoided in most cases.
  10. Ignoring Medicaid estate recovery. The state can and does proceed with liens and other proceedings to recoup benefits paid out on your elder’s behalf. In appropriate circumstances, this can be avoided with proper planning.

Laws governing Medicaid eligibility, Medicaid asset recovery and estate preservation are complex and vary between states. A qualified Elder Law Attorney can help you avoid these common mistakes.

Article Provided by:
J. Thomas Pixton, The Pixton Law Firm
(503) 968-2020

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