Keep the government out of your estate

22 Aug 2023 · 1 min

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1:01

In this video, Jerry Taylor outlines four primary strategies to protect personal assets—cash and real estate—from being seized by the government, particularly Medicaid, when long‑term care is needed. The first strategy is making annual lifetime gifts up to the $16,000 per‑recipient exclusion, noting the $12 million lifetime exemption and the necessity of a five‑year look‑back before care begins. The second strategy is creating a life estate, allowing the owner to reside in the home for life while designating a remainderman; establishing this at least five years before care can shield the home from Medicaid recovery. The third strategy involves placing assets into an annuity, with a note that some states (e.g., Colorado) may not count annuity payouts against Medicaid eligibility, so checking state rules is essential. The fourth strategy is transferring assets into an irrevocable trust, which removes ownership from the individual and can protect both cash and real property from government claims. Throughout, Taylor emphasizes timing, legal structuring, and state‑specific considerations.

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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.