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Home > Blog > Estate Planning > How To Transfer Property To Your Family Without Losing Your Medicaid Eligibility

How To Transfer Property To Your Family Without Losing Your Medicaid Eligibility


Some estate planning advice can most charitably be called aspirational.  Set up a revocable trust and transfer your property to it, so your vast fortune will not technically belong to you!  Give away $27 million in personal gifts during your lifetime, so that your heirs will not have to pay as much tax on the money they eventually inherit from you!  Diversify your investments!  Spend your money on yourself while you are alive, because you have very limited control over what your spoiled kids and grandchildren will do with it after you die!  Much of this advice does not reflect the reality in which most of us live, especially the current cohort of working adults, who do not have the luxury of building up hefty retirement savings and drawing generous pensions like their parents did.  Today’s adults live paycheck to paycheck and will continue to do so for the foreseeable future.  Even if they qualify for income-based government assistance, the government benefits plus their employment income are barely enough to make ends meet.  If you can’t save up for next month, how can you save up for retirement?  Relying on Medicaid nursing home care is the only realistic option for many of today’s working adults, who will never be able to retire because they can afford not to work; they will have to keep working until their health requires them to leave the workforce.  A Bronx estate planning lawyer can help you avoid losing eligibility for the few benefits available to the upcoming generation of retirees.

What Is the Five-Year Look Back Rule?

Medicaid pays for nursing home care for adults whose income is below a certain threshold.  To determine Medicaid eligibility, Medicaid reviews the applicant’s financial circumstances for the five-year period leading up to the application date.  This is known as the five-year look back rule.

Estate planning lawyers tell clients to spend down their assets for a variety of reasons, including but not limited to Medicaid eligibility.  If you are trying to qualify for Medicaid, though, you must give away money very gradually, and start early.  If you give away tens of thousands of dollars in cash gifts in the year before you apply for Medicaid, this will raise red flags.  Medicaid might question your reasons for giving cash gifts, even if the amounts are well below the legal limit of the annual gift tax exclusion.

Likewise, if you are going to transfer ownership of your house to a family member, there are a few ways to do it without drawing Medicaid’s ire.  You can transfer it to your sibling, but only if you owned the house jointly with your sibling for at least a few years.  You can also transfer it to your son or daughter, but only if he or she has been living with you and acting as your caregiver.

Schedule a Confidential Consultation With a Bronx Estate Planning Attorney

An estate planning lawyer can help you navigate the bureaucratic miasma of Medicaid eligibility.  Contact Cavallo & Cavallo in the Bronx, New York to set up a consultation.



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