Jerry Taylor covers four ways to protect assets from Medicaid recovery: gifting up to $16,000 annually, creating a life estate, buying an annuity (some states like Colorado exclude these from Medicaid calculations), or moving assets into an irrevocable trust.
If you want to prevent the government from getting your money or your home should you need long-term care, I've got 4 ways to help you do that. The first way is to start giving money to your kids and your loved ones while you're still healthy. You can give up to $16,000 per year to as many people as you want without having to file a gift tax return. Above that amount, you have to file a return, but right now your lifetime gift tax exemption is about $12 million. This needs to be done at least 5 years before you need the care. Second, create a life estate. With a life estate, you have the right to live in the home until you die, and then it passes to your remainderman. That's whoever you designate to get the home. And if you create that 5 years before you need the care, the home will be exempt from Medicaid recovery. Three, put your money into an annuity. Some states like Colorado do not count annuity payouts against you for Medicaid eligibility. Check to see whether your Medicaid rules and regulations allow that. And four, an irrevocable trust. Put your home or your money into an irrevocable trust.
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