If you are over the income limits to qualify for Medicaid, and you know that it is a benefit that you will need to access, there are asset and income planning techniques that you can use to help you qualify for Medicaid. These techniques can be undertaken on your own; however, you can help ensure that you get your Medicaid planning done correctly by working with an attorney.
Technique #1: Irrevocable Funeral Trust
When you die, someone is going to have to pay for your funeral. By setting up an irrevocable funeral trust, you can move some of your money into the trust so that you can pay for your funeral on your own. This allows you to reduce your assets while at the same time taking the burden of paying for a funeral off the shoulders of your family and friends.
Once you set up an irrevocable funeral trust, the money is locked in place. You can't change the trust, nor can you cancel it. You need to make sure that the money you are moving is money you don't need anymore and that you need to move to reduce your assets to qualify for Medicaid.
Technique #2: Lady Bird Deeds
If you want to protect your home and ensure that someone such as an adult child inherits your home when you die and you want to get Medicaid, you need to set up a lady bird deed. With a lady bird deed, you keep ownership of your home for as long as you are alive. However, upon your death, your home is automatically transferred to your named beneficiary, making them the owner of the house, not yourself.
With a lady bird deed, your home is not considered part of your estate, so when you die, Medicaid cannot collect the proceeds from the sale of your home to help pay for your long-term care, which is what will happen otherwise. This ensures that your family ends up with your home and that it doesn't have to be sold to satisfy your long-term care bills. If your home holds significant emotional or financial value, this is a good option to pursue.
It is important to note that a lady bird deed is not possible in all states, so consult with your legal counsel to see if this is an option for you.
Medicaid rules vary from one state to the next, which is why you are going to want to work with an elder law planning professional.