Many people come to me worried about “protecting” their assets and wanting to engage in “Medicaid Planning.” Most don’t understand what Medicaid is all about or even what the problem really is. The issue is the cost of Long Term Care. If you need physical help with your daily activities due to age or infirmity, you will have to pay for that care as it is not medical care that is covered by your health insurance. No one knows with any certainty what their future care needs or costs will be, so it is hard to plan for it.
There are three ways to pay for your care needs. The first is to pay out of your own funds (self-insured). If you have a substantial amount of savings, then this is a viable option. The second choice is to purchase Long Term Care Insurance. This can provide the funds needed to pay for your future care but costs you now in terms of premium payments. The last option is to have the Government pay for your care through the Medicaid program. Medicaid (called MassHealth in Massachusetts) is a welfare program. You only qualify if you are poor enough to meet the eligibility requirements. That usually means you must spend all of your money before you qualify. For some this may happen and for others it won’t.
When people tell me they want to “protect” their assets, I ask them who they want to protect them for. For those without children, this is often a revelation. They don’t need their assets for anyone but themselves so don’t need to “protect” them. If you do have children you may want to preserve assets as a future inheritance for them. On the other hand, your children may be well off and not care whether or not they ever inherit any assets from you. They may prefer that you use your assets for yourself. If you don’t have anyone that you need to protect assets for, then you may not need to engage in any Medicaid Planning.
The problem is that in order to protect assets, you must place a barrier between yourself and your assets. You must place your assets out of your own reach so that you cannot be forced to spend those assets on your own needs. This isn’t really what most people want to do. They usually want to have access to their money and to be able to spend it as they wish. However, if you wish to protect it, you must give up the right to spend it. This isn’t right for everyone.
So, if someone told you that you must put your house in your kids’ names, or you must create an irrevocable trust to “protect” your assets, you may not need to do that. For some people, and in some situations, it is the right thing to do, but it’s not right for everyone. If you have questions on whether or not you need Medicaid Planning, contact your Elder Law Attorney.