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Why is it critical to consider Medicaid when estate planning?

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Why is it critical to consider Medicaid when estate planning?

On Behalf of | Jun 17, 2021 | Estate Planning

One of the aims of estate planning is to ensure you have enough assets to see you through your retirement and a decent amount to pass onto your children when you die. Yet, there is one situation where having too much can bad thing.

If you fall ill in later life, have too much wealth will limit your access to Medicaid. Or it can put paid to all your years of hard work and saving.

Medicaid can soon drain your assets if you let it

If you need to use Medicaid services, they will seek to charge you. They will seek payment from the money you hold in the bank, your investments and even your home unless you come in under the limit of their wealth assessment.

Medicaid operates a look-back period where they can review the last five years to see if you have given away assets during that time. If so, they can seek to recover those assets as payment for your treatment. You can use Medicaid once you reach 65 years old, so ideally, you need to have transferred assets by the time you turn 60. There are, however, other estate planning factors that will affect your decision about this.

Giving away all your money before retirement is rarely wise

If you do not have any assets, then Medicaid cannot charge you. Yet, you still need to live, and it would be nice to enjoy your retirement rather than scrape through it. You could strike a deal with your family where you transfer wealth early, and they help fund your retirement. Yet, there is a lot that could go wrong here.

Creating an effective estate plan is a complex task. Even when you think you have it right and have considered everything, a change in the law could upset it. Getting regular advice is essential to help you review your current situation and plan for a future that you cannot predict.