People who engage in estate planning will have a different focus during the process depending on their current stage in life. For example, young professionals and new parents will likely focus their estate plan on protecting their children by naming a guardian and creating a trust to leave a legacy that can offer financial protection for their children long after they die.
Those who have recently gone through a divorce may take steps to structure their estate plan carefully so that their ex won’t receive any assets from the estate. Adults getting close to retirement age or revisiting their estate plan well into retirement may need to think more about their medical needs and protecting their assets.
Medicaid planning is common for older adults adjusting or creating an estate plan.
Why is Medicaid planning important for older adults?
As the name implies, Medicaid planning involves creating a legal and financial strategy that will allow you to qualify for Medicaid if you need assets as you continue to age. Medicare does not cover long-term care, such as nursing home costs.
Medicaid may become necessary to cover your expenses as you continue to age. Unfortunately, Medicaid has strict limitations on the assets that you can have in order to qualify. Reducing the total value of your assets early by making gifts to family members or moving major assets into a trust can help ensure that you can qualify for Medicaid without incurring a penalty when you need those critical protections.
Will your house count against you when you apply for Medicaid?
Having a home of your own does not immediately disqualify you from receiving Medicaid benefits. A certain amount of home equity, up to $858,000, is permissible for those seeking benefits.
However, those engaged in Medicaid planning make may still find that transferring ownership of the home to a trust may give them a stronger sense of security and reduce the likelihood of Medicaid coming after the equity in the home after they die.
Looking carefully at your financial records and the current value of your home may give you a better idea of what steps you should take as you begin the Medicaid planning process.