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Medicaid Planning in Minnesota: Preserving Assets and Qualifying for Long-Term Care

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Why is Medicaid Planning Important for Minnesotans?

Medicaid, also known as Medical Assistance in Minnesota, is a government program that helps pay for medical care for low-income or disabled individuals. When it comes to estate planning, many people look to Medicaid as a means to help them afford the extremely high costs of long-term care. It can be a delicate balancing act to qualify for Medicaid while preserving assets to provide for your loved ones’ futures due to the strict financial eligibility requirements imposed on applicants. Including Medicaid planning as part of your overall estate plan can help you feel confident that you will be able to pass down your legacy to your heirs while still getting the quality care you need if your health deteriorates.

How Do Individuals Qualify for Medicaid?

In addition to requiring Medicaid applicants to be US citizens living in Minnesota who demonstrate a legitimate need for medical care services, the state also imposes strict financial requirements. The exact economic threshold for qualification changes yearly and varies based on your marital status and other circumstances. If you have more assets than the program allows, your Medicaid application will be denied until you reduce the value of your assets through approved means.

Without a long-term care plan in place, many individuals are forced to pay out-of-pocket for their care until they have almost no funds left. At this point, they will finally qualify for Medicaid coverage. Unfortunately, this depletion of funds can leave their spouse or loved ones in difficult financial circumstances.

What are Common Financial Tools and Strategies Used in Medicaid Planning?

There’s no one-size-fits-all solution to Medicaid and long-term care planning. A comprehensive plan to preserve your assets will take into account your financial situation, the circumstances of your beneficiaries and spouse, your potential care needs, and your goals for your estate. An estate planning attorney will use this information to decide which combination of strategies is best for your unique situation. Once your plan is created, it is vital to continue revisiting it periodically to ensure that it adequately accounts for your changing assets and complies with any new state laws.

Medicaid Protection Trusts

Following a Minnesota Court of Appeals ruling in 2023, Minnesotans are now permitted to use Medicaid protection trusts to preserve their assets from nursing homes, long-term care providers, and other creditors. These trusts must be set up correctly to ensure they meet all necessary guidelines. An estate planning lawyer can assist you with creating and funding a trust so your assets are passed on to your designated beneficiaries.

Asset Transfers

By giving away assets to family or friends, you remove them from your possession so they cannot be used to pay for long-term care. This method may allow you to preserve your assets while meeting spend-down requirements to qualify for Medicaid coverage.

Still, it has serious limitations, and you should speak to a lawyer before attempting to transfer assets. This strategy requires a strong knowledge of the state’s laws and typically must be carried out several years before care is needed to adhere to the rules and avoid penalties.

Irrevocable Trusts

When assets are placed into an irrevocable trust by a grantor, those funds are no longer considered part of the grantor’s estate. The grantor cannot change or dissolve an irrevocable trust, and creditors of the grantor or beneficiaries are unable to touch the funds within it. The trust’s assets are managed by a trustee who is directed by guidelines set out during the trust’s creation. The guidelines allow the grantor to have some control over the distribution of the funds, even though they can no longer access them. Many types of trusts exist, and it is critical to work with a skilled lawyer to determine which variety best meets your Medicare planning needs.

Durable Power of Attorney (POA)

While a POA doesn’t necessarily preserve your assets, it is still a crucial part of any long-term care plan. Your POA authorizes another individual to make decisions on your behalf regarding your finances and healthcare. If you suffer a sudden health emergency, such as a stroke, which requires you to move into a nursing home temporarily or permanently, your designated POA can file for Medicaid benefits on your behalf and manage your assets to ensure you meet the eligibility requirements.

Why is Early Action Critical When Planning for Long-Term Care?

No one likes to think about needing long-term care. However, creating a plan for Medicaid while you are still in good health gives you the most options for protecting your assets. Properly preserving your assets requires detailed and careful planning, which can take time.

For example, you may wish to use asset transfers as part of your Medicaid plan. However, Minnesota has strict rules on asset transfers and enforces a “lookback period” of five years. If you have transferred assets within the last five years, you may face penalties, and your eligibility for Medicaid could be delayed. Trusts have fewer time restrictions, but they must be set up correctly with the assistance of a knowledgeable lawyer, which can take time.

Your options for planning are more limited if you or your spouse already require long-term care, but there may still be strategies available for protecting your assets. An experienced estate planning lawyer can evaluate your situation and determine which planning tools may be right for you. However, prompt action is key to reaching the best possible outcome.

How Can an Estate Planning Lawyer Help You Preserve Your Assets?

A robust estate plan accounts for all eventualities, including the possibility of requiring long-term care. Our lawyers at Metropolitan Law Group, PA, have the legal knowledge and skills to assist you with every aspect of your plan, from creating a durable POA to implementing a financial strategy for your long-term care needs. Contact our law firm today to schedule a free strategy session with a compassionate Minnesota estate planning attorney who is ready to assist you: 612-448-9653.

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