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Will You Make These Common Asset Protection Mistakes?

Updated: Oct 6, 2022

This article was written by Timothy L. Takacs, Certified Elder Law Attorney; reviewed in 2022 by Chris C. Johnson, VA Accredited Attorney*

If someone you love needs nursing home care and you need Medicaid to help pay for it, you may have heard people talk about spending down assets. Without the right help, it’s easy to make mistakes in the process. Here are ten of the most common mistakes we see.

Relying solely on a will or a living trust

A will takes effect only upon your death, and a living trust, although preferable in many cases, will not protect your assets from the government and the nursing homes.

Relying on Medicare or health insurance

Neither Medicare nor health insurance pay for the cost of long-term care in a nursing home. With the average cost exceeding $7,600 a month, without a Plan most families will quickly run through their life savings.

Transferring all assets to children or other relatives

This almost always results in lengthy and unnecessary periods of ineligibility when Medicaid or other public assistance is applied for. And the tax consequences can be devastating. Often, it’s wiser to do nothing.

Placing all assets into joint ownership with another family member

This is often regarded the same as a transfer and can result in lengthy disqualification periods. And it typically provides no protection to you assets. It can also create unfortunate legal problems for families.

Selling the family home to pay for nursing home care

This is almost never required. Yet many still believe that a person must sell his home to pay the nursing home.

Not taking Medicaid estate recovery seriously

The government can and does sell your home after your death to recoup benefits paid out on your behalf.

Applying for a conservatorship or guardianship

This court-supervised method of dealing with a person’s incapacity is time-consuming, costly, burdensome, and restrictive. With proper planning, you avoid the need to go to court.

Relying on family members to “do the right thing” when critical healthcare and financial decisions need to be made

In the absence of a plan to protect assets and other planning documents, this is an awful burden to place on the members of your family. Further, many family members simply lack the expertise in the area to know what the right thing to do is. If you don’t tell your family members what your desires for health care decisions are, and delegate the appropriate legal authority for them to act, it can often be impossible for your family members to “do the right thing.”

Not seeking the advice of a specialist in elder law and asset protection planning

Medicaid and other government benefits programs are a highly complex area of the law; the law varies from state to state and even within a particular state. Very few attorneys and advisors know and understand the laws and rules that apply.

Doing nothing

Unless you have no assets to protect or you are unconcerned about how decisions will be made in the event of your disability or incapacity, you should take steps now to protect yourself.

Questions? Need help? Takacs McGinnis Elder Care Law is here for you. Just give us a call at 615.824.2571.

*Medicaid and elder law are highly complex areas of the law. The laws are not the same in every state. Unfortunate and costly mistakes can be made if you do not know what you are doing. Please consult an experienced attorney with experience in these matters.



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