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Medicaid planning: How it can affect an estate plan

The population of the United States is getting older as people live longer. Increasing numbers of people require long-term care, and Medicaid is often an integral part of planning or that eventuality. If a District of Columbia resident is engaging in Medicaid planning, it could affect how the rest of his or her estate plan is crafted.

Protecting assets from taxes, creditors and others is one of the main goals of estate planning. For instance, under ordinary circumstances, people use gifting in order to reduce their taxable estate. The federal gift tax exemption allows an individual to give away up to $14,000 per year to another person without creating any tax liability for the giver. However, when it comes to Medicaid eligibility, those limits are different, and this needs to be taken into consideration if he or she is planning on applying for benefits.

Some people will own their assets jointly with children in order to keep them from going through probate if it is determined that is the best way to handle passing those assets on after death. However, these people are still considered to be owners of the assets, and they will be counted when applying for Medicaid benefits. Even if a person is approved to obtain benefits, jointly held assets could result in a delay in receiving them.

These are only two examples of how certain estate-planning decisions can interfere with Medicaid planning. A District of Columbia resident who anticipates needing long-term care may benefit from creating a plan that will not only meet his or her expectations for distributing assets after death, but also anticipates applying for Medicaid benefits. In order to do this properly, it may be wise to enlist the advice and assistance of someone who is not only familiar with estate planning, but also with the eligibility requirements of Medicaid.

Source: thetimesherald.com, "The truth about nursing home Medicaid eligibility", Matthew M. Wallace, March 21, 2015

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