For many, estate planning is used to create guidelines for end of life care, establish how assets will be distributed to children and spouses, and give closure to families. However, one major aspect of Tennessee estate planning is the giving of gifts to certain loved ones. But when an individual is planning to utilize Medicaid and TennCare services, giving gifts to loved ones can actually become problematic. The Tennessee estate planning lawyers at Martin Heller Potempa & Sheppard, PLLC explain.
Impact of Gifts When Utilizing Medicaid Benefits
When applying for Medicaid benefits, the individual must divulge any information about gifts and transfers made within five years leading up to the application. This five-year timeframe is known as the “lookback period.” If during the lookback period there was a transfer of assets made for less than the full market value, the application will likely be denied. These types of asset transfers are known as gifts.
Examples of gifts may include:
- Paying family members’ bills
- Donations to charity
- Changing inheritance
However, a penalty period may be established where the applicant will pay for the care facility out of pocket instead of Medicaid benefits.
There are some assets that do not disqualify you for Medicaid. Typically, they are transfers or gifts to the following family members:
- Applicant’s spouse
- Children under age 21
- Special needs children of any age
In addition to giving assets or gifts to these family members, the applicant can also transfer the home to the above or, one of the following without repercussion:
- A sibling or half-sibling who has an equity interest in the home and who lived in the home for at least one year prior to the applicant’s entrance into a care facility.
- A child who provides caregiving and who has lived in the home for at least two years prior to the applicant’s entrance into the care facility.
I have too many assets. How can I qualify for Medicaid?
A TennCare representative can walk you and your family through options to spend down your assets and qualify you for TennCare or Medicaid planning.
Most often, you will have the ability to create a special needs trust to care for a disabled loved one or family member, however, there are also caveats to those types of trusts.
How Our Nashville Trust Attorneys Can Help
Our Nashville trust attorneys understand how difficult it can be to make decisions about the future especially when it comes to long-term care facilities. With compassion and respect, we will work with you to make the process as simple as possible. Do not delay planning.