Start Liquidating assets before divorce

Liquidating assets before divorce

Jones would have spent down her remaining assets and be able to qualify for Medicaid coverage.

But for transfers made after February 8, 2006, the so-called "look-back" period for all transfers is 60 months.

While the look-back period determines what transfers will be penalized, the length of the penalty depends on the amount transferred.

The penalty period is determined by dividing the amount transferred by the average monthly cost of nursing home care in the state. Transfers should be made carefully, with an understanding of all the consequences.

For instance, if the nursing home resident transferred $100,000 in a state where the average monthly cost of care was $5,000, the penalty period would be 20 months ($100,000/$5,000 = 20). People who make transfers must be careful not to apply for Medicaid before the five-year look-back period elapses without first consulting with an elder law attorney.

The bumper sticker that reads "I'm spending my children's inheritance" is a perfectly appropriate approach to estate and Medicaid planning.

Even though a nursing home resident may receive Medicaid while owning a home, if the resident is married he or she should transfer the home to the community spouse (assuming the nursing home resident is both willing and competent).

During these six months, she used the remaining $36,000 plus her income to pay privately for her nursing home care.

After the six-month Medicaid penalty period had elapsed, Mrs.

Congress has established a period of ineligibility for Medicaid for those who transfer assets.

For transfers made prior to February 8, 2006, state Medicaid officials would look only at transfers made within the 36 months prior to the Medicaid application (or 60 months if the transfer was made to or from certain kinds of trusts).

To determine whether it is still an available strategy in your state, you will have to consult with a local elder law attorney. Any transfer strategy must take into account the nursing home resident's income and all of his or her expenses, including the cost of the nursing home.