Long-term care is a reality for most Americans, yet this care is notoriously expensive. Medicaid is an option for supplementing the cost of this care, but there are some restrictions to this funding.
Paying for long-term care out of pocket is a frightening thought, often draining savings accounts or requiring the sale of the family home. However, Medicaid requires applicants to have low income or limited assets. This is why the question of legally hiding assets is common amongst those doing Medicaid estate planning.
Government action against hiding assets
Since the income and asset limit thresholds were so low, many people would try to give their assets to family members as gifts and avoid the sale or use of the funds for long-term care expenses. The federal government passes the Deficit Reduction Act of 2006 to make it more difficult to gift assets in order to meet eligibility for Medicaid. There are penalties in place for giving away funds or transferring ownership of assets and savings to fall below the income limit required by Medicaid.
Legal protection for assets
Much of the financial protection that is legally available must take place several years before submitting an application for Medicaid. To prevent fraudulent conveyance, take action at least five years prior. By creating an irrevocable trust, the assets are legally repositioned to an independent trustee, making the individual no longer the legal owner.
Investigate the legal ways of protecting your assets, instead of trying to hide them. The implications of hiding them can devastate your savings and impact your financial stability.