As part of your estate planning process in New York, one aspect that you might want to consider is Medicaid planning. Medicaid planning involves making legal arrangements to preserve your assets while qualifying for Medicaid benefits.
Here is what you need to know about including Medicaid planning in your estate plan.
Why include Medicaid planning in your estate plan?
If you want to ensure that you can qualify for Medicaid if the need for long-term care arises, you should include that in your estate plan. In New York, the cost of long-term care can be high. Medicaid can cover these costs, but to qualify, you must meet certain income and asset limits. If your income or assets are above these limits, you may have to spend down your assets before you can qualify.
By including Medicaid planning in your estate plan, you can protect your assets while still qualifying for benefits.
What strategies can you use for Medicaid planning?
One common Medicaid planning strategy is the use of trusts. A trust is a legal entity that holds assets for the benefit of certain individuals. An irrevocable trust, for instance, can hold your assets so that they do not count toward Medicaid’s asset limit. You give up control of the assets you put into the trust, but they will not be part of your eligibility calculation for Medicaid.
Another strategy is gifting assets to family members or other loved ones to reduce your countable assets for Medicaid eligibility. However, you must be aware of the five-year look-back period. Medicaid can look at any transfers made within the five years before your application and penalize you by delaying your eligibility.
Medicaid planning requires a good understanding of both federal and state laws. Including it in your New York estate plan can help ensure that you have the care you need in the future, while also protecting the assets you have worked hard to accumulate.