Seniors are becoming increasingly anxious as they get older. This is largely because they know they will be required to completely spend down their assets if there is a need to be placed in a nursing home. These seniors have worked their whole life to earn what they now have. Now, because of an unforeseen illness, the sick and the healthy spouse will be left with nothing. This can add to states of depression, making matters even worse.
Most seniors experienced World War II and have the mentality that if you cannot buy something with cash, you cannot buy it at all. In fact, one of the only reasons some seniors own a credit card is because they are forced to use that card to pay for prescriptions ordered through the mail. The overall health of these seniors is based on the knowing that if they need something, they can utilize their resources to get it. Now with the mandatory spend-down of assets, they have much to fear.
Is there a Way to Hide Assets from Medicaid?
With these hard realizations comes a common question. Seniors are asking if there is a way they can protect their assets from having to be spent down. Unfortunately, there is no quick fix to this problem. Asset planning has to be done far in advance. For most seniors, they have already waited too long. If they did not take action more than five years ago, there is probably little hope now. If they do decide to take a chance by doing something with their assets now, that action may very well be considered to be a fraudulent conveyance with the intention to defraud any creditors.
For example, many seniors consider placing their homes in their children’s names. If this were to occur within five years of one of the spouses being placed in a nursing home, it may be considered a fraudulent conveyance. This is because the home was transferred for far less than the fair market value, meaning the seniors would receive little or nothing in return. Some seniors believe they can give their house away as a gift. Again, this cannot be done because there would be tax implications. Whoever gave the house away would be responsible for paying the taxes due.
Spend-Down Provisions for Medicaid are Restrictive
The new provisions in regards to spending down assets are extremely restrictive. Basically, before you are able to be eligible for Medicaid, you must spend down all of your assets. This would pretty much make the senior a welfare recipient. This is an outrage to seniors. They do not wish to be the recipient of welfare, especially after they have worked their whole lives for what they now have. The entire concept can be very degrading and humiliating.
Mistakes made When Trying to Hide Assets from Medicaid
There are three major mistakes that are commonly made when seniors attempt to hide their assets. First, they name their children on their accounts, such as savings, investments and checking. This is never a god idea. If something were to happen to the child, the senior would no longer have access to their own money. In addition, if the child has a life-altering experience, such as illness or divorce, they may be tempted to dip into those accounts, and these assets really do not belong to them!
Second, seniors will often give their home to their children. This is another huge mistake. There are many risks involved when doing this. If the child gets sued or divorced, the house is considered an asset and can be taken.
Third, seniors do not believe in banks and will hoard their cash. It is not uncommon for seniors to keep cash under a mattress or tucked behind a wall. This is one way to hide the cash asset, but they will be missing out on interest earned and the security offered by having the money in a bank.
So how can seniors protect their assets from the Medicaid spend down?
So, what can seniors do to protect their assets? They can make use of a trust. Trusts are powerful legal devices that can be the solution to these concerns. An irrevocable trust is the best way to go for seniors looking to hide their assets legally. With this kind of trust, all of the assets are re-positioned to an irrevocable trust. This means that the senior no longer owns the assets.
The trust involves the complete transfer of all assets to a trustee. The trustee must be independent, meaning they can in no way be related to the beneficiary. The trustee must act in the best interest of the beneficiary at all times.
There are some specific rules and laws that relate to the protection of assets. To learn more about irrevocable trusts and how to protect assets, visit: