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As tax preparation time begins, many seniors are asking to contain Medicaid asset protection as part of their tax organizing methods. For those of you not familiar with the 2005 Tax Reduction Act, some of the provisions address specific transfers by seniors under the new Medicare nursing residence provisions. Under the new provisions, before a senior qualifies for Medicare assistance into a nursing property, they need to invest-down their assets. These new restriction have a five year appear-back, used to be 3 years. And used to be that every spouse had a one-half interest in the marital property, it now appears that all the marital assets are to be spent-down. I have not observed certain regulations but it appears that the wholesome spouse will be left without having any assets if one of them gets sick.

Ideas by seniors have been to transfer their assets to their youngsters. Despite the fact that this choice is available, Im not certain that its a very good alternative. What if the youngster decides to use the asset for themselves, what if they get divorced and the judge awards assets originally intended for the parents to the divorcing wifes decree, what if the child gets sued?

There are also tax implications. If the assets are transferred to the child for much less than fair industry value, then its a taxable gift. Even worse, if this sort of transfer to the kid is completed prior to the 5 years-appear back, -is it a fraudulent conveyance?

Medicaid asset protection has to be carried out extremely meticulously. Planning in this location is evolving. There are a lot of eldercare law firms popping up all more than the spot. I have been approached by such a firm to send them clientele. They claim that they can structure a new deal whereby the nursing residence wont be in a position to attach assets even immediately after they enter the nursing home.

I know this significantly, any method used to deflect assets from the original owner has to be done at its fair industry worth. For example you just cant transfer your property from you to your youngster. There are tax consequences. Did you just sell your property? Or did you just gift your house? Who will establish the fair market place worth? Did you get a genuine appraisal? If as a result, its at much less than fair industry value (prepared buyer and prepared seller, neither beneath compulsion to buy or sell, every single acting in their best interest) did you just develop a more challenging dilemma?

Any technique whereby theres an element of strings attached, its revocable and therefore you have carried out nothing to disassociate yourself from your asset. One particular can challenge your intent, to divert assets for the purpose of defrauding a possible creditor and failure to have filed a gift tax return has statutory penalties, and interest, worse- if Medicare intended, criminal?

I am aware of only 1 strategy of disassociating yourself from your asset (private residence, your CDs, your investments, vacation spot) is to give it away. Period. You can gift it to your kids, pay the tax and thats it. The dilemma is that you no longer have any control and you are at the mercy of your childs great intentions and a blessed spouse. Risky? You bet!

An irrevocable trust with an independent trustee (not related to you by blood or marriage) will fit the bill.

An irrevocable trust, is an irrevocable contract among you and the independent trustee to manage the assets for the benefit of all beneficiaries. You and your spouse can turn out to be beneficiaries along with your kids and grand children.

Timing is really important. If the transfer (repositioning) of your beneficial assets is accomplished ahead of the five years, chances are great that it will stand-up in court. What if its before the 5 years are up? Is your Medicaid asset protection program nevertheless very good? In my book its much better to have accomplished one thing than absolutely nothing. what is medical fraud report medicare fraud medicare billing fraud