The key problem that arises with respect to elderly planning is the high cost of extended care facilities during one’s later years. Many people do not begin to even thing about long-term care until they hit their eighties, but due to the five-year look back period it would be far better to take this up in one’s early to mid-sixties. There are numerous rules in Texas that provide the qualifications for one to be able to get Medicaid services, and an early consultation with an elder law attorney would be a good way to becoming well informed and prepared.
There is a limit on the value of assets that one can have in order to qualify for Medicaid. Early planning, through appropriate gifting to family members, may be all that is necessary in some instances. Additionally, some assets are exempt and will be appropriately maintained in their current status. These include certain retirement accounts and the applicant’s home under certain circumstances, such as where a spouse, minor or disabled or blind child is living in the home.
There is generally no look-back period for home care services, but the five-year period does apply to nursing home care. When making gifts to children in order to preserve assets and protect them from Medicaid recoupment, there are various tax pitfalls and other legal ramifications that may be involved. It is necessary to make sure that a gift to a child will not be subject to that child’s own debt or other life complications such as a divorce.
Various other legal techniques are available for long-term care planning, depending on the asset, tax, and life circumstances of the elderly person. This can raise a number of considerations that must be carefully evaluated along with one’s elder law attorney, and where appropriate, a C.P.A. or financial planning expert. Although the transfer outright of an asset to a child or loved one is the easiest way in Texas to handle the problem of asset preservation, the complications, both tax and non-tax, that can arise in any particular set of facts, requires a thorough evaluation of all factors prior to taking action.
Source: insurancenewsnet., “Tax Issues to Consider in Elder Care Planning”, Elizabeth Forspan, April 24, 2015