How to Protect Clients’ Assets Through Medicaid Planning

Estate planning and elder law attorneys play a crucial role in helping clients preserve their assets while preparing for potential long-term care needs. Medicaid planning is a powerful way to do so with strategies to protect savings either proactively or during a long-term care crisis. Here’s how attorneys can use both pre-planning and crisis strategies to guide clients effectively through the Medicaid planning process.

Read More: The Importance of Medicaid Planning and the Attorney’s Role

Proactive Planning with Trusts

Proactive Medicaid planning focuses on setting up asset protection well in advance of needing long-term care. Irrevocable trusts are the cornerstone of this strategy. Assets placed into an irrevocable trust are no longer considered owned by the client, provided the five-year Medicaid lookback period is satisfied. These assets are excluded from Medicaid’s resource calculations, offering long-term protection.

Benefits of establishing a trust include:

• Preserving wealth and safeguarding funds for future generations
• Allowing income for the healthy spouse while protecting funds for heirs
• Avoiding penalty periods tied to asset transfers

Trusts are ideal for clients who are in good health but want to prepare for potential long-term care costs down the road. As a complement to this strategy, clients may also want to purchase a long-term care insurance policy to further safeguard assets from covering these costs.

Crisis Planning with Medicaid Compliant Annuities

When a client or their loved one is already facing a long-term care crisis, it’s not too late to preserve what they have left. You can still help families protect as much wealth as possible while meeting Medicaid’s strict eligibility requirements.

Medicaid Compliant Annuities (MCAs) are among the most effective tools for accelerating Medicaid eligibility while protecting assets. When properly structured, an MCA converts an individual’s excess countable assets into an income stream with zero cash value while qualifying them for Medicaid benefits.

Benefits of purchasing an MCA include:

• Immediate Medicaid eligibility upon completion of the annuity transfer
• Income paid to the community spouse remains outside Medicaid’s asset limits.
• Preservation of excess funds that would otherwise need to be spent down

How Attorneys Can Add Value in Medicaid Planning

Avoid Common Pitfalls: Attorneys can help families navigate the complex Medicaid regulations to avoid mistakes, such as improper asset transfers, which could trigger penalty periods.

Tailor Strategies: Each client’s situation is unique. Attorneys can design strategies that balance asset protection with eligibility requirements while honoring the family’s goals.

Ease Emotional Stress: Families facing a sudden long-term care need are often overwhelmed. Professional guidance provides peace of mind during a challenging time.

Read More: A Step-by-Step Guide to Your First MCA Case

Working Together to Protect Clients

Medicaid planning, whether proactive or during a crisis, requires deep knowledge of asset protection laws and Medicaid regulations. By leveraging tools like irrevocable trusts, MCAs, and funeral expense trusts, attorneys can help clients achieve their goals while navigating the complexities of Medicaid eligibility.

If you’re ready to expand your expertise in Medicaid planning or need assistance implementing these strategies for your clients, contact our team at Krause Financial. We’re here to support you in providing the best possible solutions for your clients and their families.