Medicaid is a government program that helps various Americans with the cost of their medical needs if they qualify to receive assistance under the program. Elderly Americans who qualify may use Medicaid funds to pay for long term nursing home care and avoid having to pay for the cost of that out of their estates. Medicaid has limitations on the value of assets a person receiving Medicaid can own and still receive Medicaid, and therefore, some planning is necessary if a person is planning on using Medicaid to pay for long term care.

When receiving Medicaid as a senior, one of the requirements is that the recipient does not receive income or own assets over a certain amount. If a person has assets over the Medicaid asset limit, the person can spend down those assets in order to meet the eligibility requirement. For some people, the spending down may involve paying for nursing home costs or other medical care, others may try to meet the eligibility requirement by gifting away the assets to friends or family members.

Unfortunately, if these transfers or gifts are made within five years of filing for Medicaid, the person applying for assistance may face penalties or have the application denied. The applicant may also be deemed ineligible for Medicaid for a certain period of time. This five-year period is known as the look back period. There are certain steps that an applicant can take to ensure that gifts given during this period do not result in a penalty.

Homes that are owned and occupied by the Medicaid applicant or his spouse are not usually subject to the limitations on asset transfers. Transfers of assets to spouses also do not count because a spouse’s income is also considered in determining eligibility. Additionally, parents can transfer their home and other assets to children with disabilities or to trusts established for the benefit of those children. Transfers can also be made to an adult child who lives with the Medicaid applicant and provides care and assistance to the applicant.

There are additional ways to transfer assets without incurring penalties, and people with significant estates should speak to an experienced attorney to figure out the best approach. Applicants should be careful because many of the methods applicants used in the past to transfer assets and avoid Medicaid penalties are no longer valid.

Note that a penalty under Medicaid for gifts or transfers of assets during the look back period is different from tax penalties from the IRS. Even if the gifts given in a tax year fit within the gift allowance, the gift giver may still face a Medicaid penalty for simply making the gift.

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If you are in the process of planning for your long term care and how the assets comprising your estate will be distributed to your heirs, you should speak with an experienced estate planning attorney to ensure that you and your heirs are not negatively affected by the plan you put in place to transfer assets. For a consultation to discuss your estate plan, contact Resnick Law, P.C., to talk to knowledgeable estate planning attorneys in Bloomfield Hills and Detroit, Michigan.

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One way in which financial elder abuse can happen is when an elderly person can no longer take care of his or her finances and is perceived as an easy target to be exploited. In these situations, someone may need to take over the elderly person’s affairs. This may be done through seeking conservatorship over the person’s estate.

The initial concern for conservatorship is whether the person whose property is to be placed under conservatorship is legally incapacitated. To start the process, a qualifying person files a petition for conservatorship with a court. The petitioner has to prove that the person to be protected through conservatorship is not competent and cannot take care of him or herself. The court may also appoint a guardian ad litem to help the court decide whether conservatorship is the best option. Once conservatorship is approved, the person to be protected under the conservatorship is referred to as a protected individual.

When a petition for conservatorship is filed, other interested people have to be notified of the petition in order to enable them to file any objections they may have to the petitioner being appointed as a conservator. The person who is the subject of the petition can also contest the conservatorship. Petitioners usually have a connection to the person they seek to protect; for example, an adult child may file a petition for conservatorship over a parent. If there are multiple adult children that all qualify to serve as conservators, the court chooses the child the court finds to be the most qualified or capable to take on the responsibility. Generally, the court can appoint any competent person over the age of 18 years old to be a conservator, which includes professional conservators.

Once appointed, a conservator is responsible for managing the protected person’s property and ensuring that it is not wasted or dissipated. The decisions the conservator makes regarding the management of the property can be reviewed by a court, and if the conservator has misused funds, the court can order the conservator to pay the money back. A conservator is entitled to reasonable compensation, however, and this may sometimes be taken from the property the conservator is managing.

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If you are concerned about a family member who is elderly and at risk for financial exploitation, you should explore the possibility of petitioning for conservatorship. This can be a difficult decision to make, and it is best to have an experienced attorney walk you through the process of filing a petition and help you understand the responsibility you will be taking on. For more information on conservatorship in Michigan, contact us at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan, to schedule a consultation.

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