To many people, estate planning is synonymous with choosing beneficiaries for their property when they die. That is certainly an important component of the estate planning process, but it is far from the only step involved.
Estate planning is also – in addition to additional pressing considerations – about someone’s comfort and protection later in life. For example, people can take steps before they retire to protect their assets from creditor claims and to prepare themselves to qualify for Medicaid benefits. While many older adults might hope that they will only ever need Medicare coverage, those who have major health issues later in life or who end up moving to a nursing home might require the support of Medicaid benefits.
Older adults and the people who love them often find the two reasons below to be compelling inspiration for engaging in advanced Medicaid planning.
1. It takes time to get benefits
If someone doesn’t plan to qualify for Medicaid before their health declines, they could end up in a difficult scenario where they need support that they don’t have the resources to pay for during their retirement. They can apply for Medicaid, but the state may impose a penalty before granting coverage.
Michigan goes back over 60 months or five years of financial records when determining if someone qualifies and if they have to pay a penalty. Any penalties imposed will pass expenses to the applicant and delay their eligibility for Medicaid benefits.
2. People have to repay their benefits
Medicaid eligibility depends on financial need, which means those with significant income or personal property likely won’t qualify without a penalty. Thankfully, someone’s house won’t prevent them from qualifying, even if it is worth quite a bit of money. However, the state can make estate recovery claims against someone’s home and other remaining assets after their death.
In theory, the probate courts could force the executor of someone’s estate to sell off all of their property, leaving nothing for their loved ones to inherit. It is only by advance planning that someone can protect certain assets and make it easier for themselves to qualify for Medicaid benefits when the need arises.
Thinking about a possible future need for Medicaid benefits and other complicated financial considerations can help those who are hoping to create or revise Michigan estate plans with the assistance of a seasoned legal professional.