I recently entered the world of beekeeping. When contemplating this new hobby, I obviously vetted my ideas with friends and family (not the neighbors). Their responses were comical and in all cases, far from the truth. Sitting down to write this piece I thought, this is no different than the practice of elder law. So many people come into my office with preconceived notions that for the most part, are largely false. The following are examples of some fallacies.
“I Am Not Eligible for Medicaid Until I Spend All My Assets”
With the right approach, almost anyone can qualify for Medicaid. In some cases, such as community Medicaid (homecare) or where there is a spouse, we can contemplate transferring assets. In nursing home cases, where there is no spouse or advanced planning, we can implement planning to save some of the assets while also qualifying for Medicaid. Moreover, Medicaid exempts certain assets. For instance, an IRA is an exempt resource if you are receiving your required minimum distributions. Finally, there are ways to preserve one’s income as part of the Medicaid eligibility process.
“I’m Not Elderly or I Waited Too Long”
Both statements are hogwash! Anything can happen to any of us at any time. There are no warning signs telling you now is the time to plan. Everyone should have a properly drafted power of attorney and statutory gifts rider at a minimum. Young individuals with minor children should have a Last Will and Testament to provide for those minor children. For those who think the ship has already sailed, they are some of my best cases. In most instances, these cases present themselves as nursing home crisis scenarios. You should be aware that even at the last minute, we can implement planning that can save a portion of someone’s assets while also achieving Medicaid eligibility in a nursing home.
“I Thought I Could Gift $14,000 Each Year”
A common misconception is that you are allowed to gift $14,000.00 each year without incurring a penalty for Medicaid eligibility purposes. This is incorrect. In 2016, the annual gift tax exclusion for federal gift tax purposes is $14,000.00. However, federal tax law has nothing to do with Medicaid eligibility rules. If you are gifting $14,000.00 each year, those gifts will be evaluated for Medicaid eligibility purposes. It is also important to note that the annual gift tax exclusion only matters if your estate is greater than $5,450,000 since you can gift this amount free of gift tax in 2016.
“I Thought There Was a 5-Year Look Back Period”
There is – but it doesn’t apply in all situations. Transfers to spouses are not subject to the look back. Likewise, transfers made to qualify for community Medicaid are also not subject to the look back. Finally, the law allows for certain types of exempt transfers such as transfers of the homestead to a caretaker child or transfers to disabled children.
“My Financial Accounts Are Joint – So I Don’t Need a Power of Attorney”
Depending on the bank, simply being a joint owner of someone’s account will not allow a joint owner to withdraw and transfer the balance of the account for Medicaid planning purposes. Where there is a joint brokerage account, most, if not all, brokerage firms will require the signature of both owners which cannot be obtained if one has diminished capacity.
As a novice beekeeper, I did my research and aligned myself with someone experienced in the hobby. You should also consider aligning yourself with an elder law attorney who can give you the facts or you may not get any honey. The New York elder law attorneys at Plan Today for Tomorrow are happy to provide you with the correct information regarding this, as well as, providing you insight to various other techniques to help protect your home and other assets. Please contact us or call us at 914-245-2440 to begin protecting your assets.