Q: I've heard we should consider putting someone's house in trust before you put them in assisted care
- is that the best way to protect the asset?
Thanks for your question. The answer likely depends on WHEN they enter assisted care.
The best bet is often to transfer a home into an Irrevocable Medicaid Asset Protection Trust, but there are exceptions (have a spouse in remaining in the home, have an adult child who has been living in the home for at least 2 years who prevented the person from entering a long-term care facility BECAUSE they were that persons caretaker, or they have a disabled child). Additionally, in all other cases, the house must be in the IMAPT for 5 YEARS before the house is fully protected from claims/liens from the long-term care facility for unpaid health care bills.
When most people enter long-term care, they want to apply for Medicaid because IF they qualify, Medicaid pays 100% of long-term healthcare. But, to qualify Medicaid looks DEEPLY into the applicant's finances going back 5 years (known as the 'Medicaid 5-year look-back period'). Any transfers of assets during that 5 years can trigger a 'Medicaid Penalty Period' during which the applicant is ineligible for Medicaid services. Transferring the house into a Trust is still a 'transfer' as far as Medicaid is concerned. So if the person entering the assisted care facility wants to apply for Medicaid, the transfer of the home would likely trigger a Medicaid Penalty Period - of which you can't undo.
So if the person will enter an assisted care facility soon (within 5 years) transferring the home to a Trust is likely NOT the best idea. But if it is unlikely they will enter the facility with 5 years, then transferring into an IMAPT possibly IS a good idea.
It is a complicated subject that requires more than can be discussed here. But, I also wrote a few articles on the subject which you might find helpful - you can find them on my website here: http://www.makilawfirm.com/protect-assets-medicaid/
I hope this was helpful, Thank You for your question, and best of luck!
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