By Casey Price
Price and Price , LLC
Elder Law Attorneys
Asset Protection Technique - Opportunity Through Your Will - Couple’s Planning
February 12, 2008 by Casey Price
Couples frequently have reciprocal or “I love you” wills. This type of will leaves everything to the surviving spouse and if the spouse predeceased the testator then everything goes to the children. While this type of will is normal for couples it can sometimes miss an important asset protection opportunity.
Given the high cost of long-term medical care many people seek opportunities to shelter their assets from being spent on this type of care. In a situation involving couples there are protections in place to hopefully prevent the cost of care from an ill spouse’s medical needs from impoverishing the healthy spouse. However, an individual - whether widowed, divorced or single - has very limited opportunities available to protect their assets from the high cost of long-term medical care.
Medicaid, the entity that pays long-term medical expenses for people who exhaust their financial resources, has onerous rules and regulations governing how assets can be spent. Medicaid rules make it extremely difficult to gift assets in an effort to shelter them from the cost of care. Occasionally there are opportunities set forth in the Medicaid rules to shelter assets but those opportunities are rare and require certain facts or circumstances before they are available.
While outright gifting is now mostly unavailable due to a change in the law that took effect in February 2006, there are strategies available to move assets from parents to children in an effort to protect them from being spent on long-term medical care.
One such strategy is to change reciprocal or “I love you” wills to exclude or bypass the surviving spouse. While doing this might seem like a gift for Medicaid purposes, if done correctly it is not prohibited by Medicaid regulations. This technique allows the surviving spouse to shelter a large part of the couple’s assets. In addition to changing their wills the couple will probably have to re-title assets to coordinate their assets with their estate plans. Re-titling allows assets that would have automatically passed to the surviving spouse to instead bypass that spouse and go directly to the desired beneficiaries.
Contact Price & Price, LLC, if you think this type of planning could be helpful to you or your loved ones. We will be happy to explore your personal circumstances and determine the best approach available to protect your assets from the high cost of long-term medical care.
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Asset Protection Technique
Opportunity Through Your Will - Couple's Planning
