Shifting Assets for Medicaid Eligibility Purposes Can be Tricky

When a couple in their early 80s discovered that they needed an extra $2,000 a month to pay for their assisted living facility, they decided to transfer their home into their children’s names in order to qualify for Medicaid. Many people think that such a transfer will solve their problems, but they don’t realize that the government can penalize transfers made up to five years ago.

Luckily for this couple, The Lloyd Group, in Suwanee, Georgia, was able to find the money they needed. Since the husband was a World War II veteran, he qualified for $1,949 in VA benefits per month. The couple’s savings made them ineligible for the benefits, so they set up an irrevocable trust with their daughter as trustee. This strategy allowed the husband to qualify for the benefits and provided the couple with income from the trust. Meanwhile, the five-year Medicaid look-back clock started ticking.

See Peter McDougall, Shifting Assets Requires Some Deft Moves, Dow Jones Adviser, Nov. 9, 2010.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.