As you get older, there may come a time when you require long-term care at home or in a care facility. Paying for these services can be expensive. While Medicaid can cover these costs, too many people wind up exhausting most of their personal resources before they are eligible.
However, there are ways to plan for this scenario that allow you to preserve your assets—and starting sooner rather than later can be crucial.
The look-back period
Too many people expect to just give away their assets to a loved one or transfer ownership when they need to qualify for Medicaid.
However, the Medicaid program in Virginia has a look-back period. This is a period of five years preceding a person’s application for Medicaid when the government looks to see if the applicant made a disqualifying transfer or sold assets for less than they were worth to meet the income limits.
Doing so is a violation of the rules. Each of these transactions can result in a penalty, which delays when a person can be eligible for Medicaid.
Setting up trusts
Trusts are valuable planning tools for many reasons. They allow people to transfer ownership of property to a trust managed by trustees instead of being owned by the individual.
There are many different types of trusts that serve various purposes, from protecting adult beneficiaries with special needs to making charitable contributions. The trust that can work best for you depends on your assets, who you want to administer the trust and who the beneficiaries are.
Setting up a trust takes time and consideration. It can take weeks or months to get the trust in place and fund it, which is why it is crucial to establish one when you are healthy and have the time to make informed decisions.
Planning now avoids these complications
Working with an attorney to create an estate plan that addresses Medicaid can allow parties to take advantage of solutions that can preserve their assets and legacy. And the longer you wait, the fewer options you may have.