No matter how many articles are published and posted, many myths continue to come up in conversations between estate planning attorneys and their clients, says an article from The Mercury, “PLANNING AHEAD: Outlining some common estate and Medicaid myths.” These three appear to be the most pervasive.
Myth #1: “The Reading of the Will”
Many imagine a dramatic “reading of the will,” straight out of a Hollywood movie: beneficiaries gathered in a grand library, a roaring fire, and shocking revelations about inheritance. While entertaining, this scenario simply doesn’t happen in real life.
The Reality: There is no legal requirement for a formal gathering to read the will. Instead, modern estate administration involves notifying interested parties of the decedent’s death—a process governed by state laws. In some cases, public notices may be published in local newspapers. Once the will is filed with the probate court, it becomes a public document, and copies can be obtained. However, there’s no dramatic unveiling; the process is far more procedural and straightforward.
Myth #2: “The Government or Nursing Home Takes the Family Home”
A common fear is that the government or a nursing home will seize the family residence if someone receives Medicaid-funded nursing home care. This idea often sparks unnecessary worry.
The Reality: Neither the government nor nursing homes keep an inventory of houses. If a Medicaid recipient owns a home in their name at the time of their death, the state may seek reimbursement for care costs through Medicaid estate recovery (MERP). However, this process is more nuanced than a simple “taking.”
For example:
- If the home is sold during the recipient’s lifetime, it loses its exempt status under Medicaid rules, as the proceeds are converted to non-exempt cash.
- Certain exceptions allow the home to be transferred without penalties, such as transferring it to a disabled child or a “caretaker child” who meets specific criteria.
Working with an experienced elder law attorney can help families navigate these complexities and explore options to protect the family residence.
Myth #3: “The Five-Year Lookback Period Is Simple”
The five-year lookback rule—designed to prevent individuals from giving away assets to qualify for Medicaid—is widely misunderstood. Many assume it’s a straightforward rule that applies uniformly.
The Reality: The lookback period is far from simple. Assets cannot be transferred without adhering to Medicaid’s extensive and intricate rules. Violations can result in penalties, such as delays in eligibility for Medicaid benefits. Proper planning with a certified elder law attorney is essential to ensure compliance and avoid costly mistakes.
Why Professional Guidance Matters
Estate planning and Medicaid regulations are complex and vary by state. To ensure peace of mind, consult with an experienced elder law attorney who can:
- Help you create or update your estate plan.
- Develop a long-term care strategy that aligns with your financial and family goals.
- Navigate state-specific laws to protect your assets and loved ones.
Don’t let myths and misconceptions cloud your judgment. Proper planning today can safeguard your future and provide clarity during challenging times. Contact our office to learn how we can help.
Reference: The Mercury (Aug. 16, 2023) “PLANNING AHEAD: Outlining some common estate and Medicaid myths”
