Earlier this week I was telling you about Ron. His Dad transferred his home to Ron, who currently is disabled but was not at the time of the transfer. I explained to Ron that the transfer, contrary to what he believed, is subject to a Medicaid transfer penalty of 51.5 months if Dad applies for Medicaid now. I had an idea of how we could fix it.
But, before I shared that with him I asked Ron a few more questions. “Who has been paying the taxes and upkeep on the home?”, I inquired. Ron told me that until he moved into the home a year ago, Dad was paying all those expenses. He transferred money to Ron who then paid those expenses out of his own checking account.
Again, I told Ron that up until the point in time that he was deemed disabled by Social Security, those transfers would be subject to a Medicaid transfer penalty. So, adding those amounts to the $400,000 home transfer would increase the penalty further.
Ron was really panicking now. I told him to hold on. I had a solution. “What we need to do is have you transfer these assets back to Dad now, including the home. We could then have Dad transfer the assets right back to you”, I told him.
I know you are reading this and saying to yourself, “that can’t be right”. However, the transfer back to Dad will undo the potential transfer penalty. And then the new transfers from Dad to Ron will fall within the disabled individual exception. It is critical that this all be done, however, before filing a Medicaid application.
Ron was confused and amazed at the same time. He understood what I was saying although it seemed crazy to him. But, that’s how the Medicaid rules are, complex and bizarre at times. Had Ron not called us when he did to hire us to handle Dad’s Medicaid application, he would, in all likelihood, have been faced with a lengthy penalty with no idea of how to fix it. And because it can take 4 to 6 months after the initial interview before the State actually reviews your application, Ron would not have learned of his mistake until he ran up tens of thousands of dollars of nursing home bills.
No one wants to be in that type of a mess. Ron was lucky he got the right advice at the right moment from someone who knows the complexities of the Medicaid rules. As they say, timing is everything.
At the Estate Planning & Asset Protection Law Center of Dennis Sullivan & Associates, we help people and their families concerned with losing their homes and life savings to increasing medical and nursing home costs, taxes and the costs and time delays of probate. We also protect clients from losing control of their own health and financial decisions.
We encourage you to attend one of our free educational workshops to learn more about our process and what you can do to enhance the security of your spouse, home, life savings and legacy. To register for a seat at an upcoming workshop call (800) 964-4295 (24/7) or register online at www.SeniorWorkshop.com