Frequently Asked Questions
1. What does the "5 year look-back period" mean for Medicaid planning purposes?
In order to determine whether a person is eligible for Medicaid benefits, Medicaid looks to see whether the individual has made any transfers for less than fair market value (gifts) in the last five years. If you have made such a transfer, then you will not qualify for Medicaid benefits and/or you may face a penalty period. This is why individuals who gift assets, like a family farm, for instance, must wait five years after the gift before they will be eligible for benefits.
2. What is a life estate deed?
A life estate deed is a deed where the individual (grantor) transfers property to someone else (grantee), but the grantor retains the right to live on the property for the rest of his/her life. Sometimes, a life estate deed may cause problems for Medicaid planning purposes. This is why attorneys sometimes suggest an enhanced life estate deed.
3. What is an enhanced life estate deed, a.k.a. a ladybird or transfer on death deed.
An enhanced life estate deed, such as a ladybird or transfer on death deed, does not take effect until after you die. While you are alive, you retain the right to live on your property, but you also retain the right to sell, mortgage, encumber, or otherwise dispose of the property if you wish. You may also revoke or change these deeds prior to death. The grantee only has the right to the property when you die and takes no rights upon the execution of the deed. Attorneys sometimes suggest these deeds because the property will pass outside of probate upon your death, and Medicaid Estate Recovery will not seek recovery of this property. In order to determine the best deed for you and your family, please consult with an attorney.
4. I have a Will. Is that good enough?
No, probably not. The Will only protects you when you die. However, there are several documents we need to consider if you become incapacitated and cannot handle your own affairs. These documents include a Financial Power of Attorney, Medicaid Power of Attorney, Living Will, HIPAA document, and Declaration of Guardian. An attorney also needs to evaluate whether your assets would be better protected through a trust or from passing outside of probate.
5. I've heard bad things about probate. Is it necessary to avoid probate in Texas?
Texas has a relatively inexpensive probate process. Attorneys will typically ask for an Independent Administration in the Wills they draft for their clients. An Independent Administration is a fairly inexpensive way to submit a Will to probate court. In an uncontested estate, the executor only has to attend court one time and may act independently of court control for most matters. Granted, the executor still must uphold his fiduciary duty to all beneficiaries.
Disclosure: The information given on this website is not intended to be taken as legal advice and is for informational purposes only. Everyone should consult with their attorney prior to acting on any of the information given.
1. What does the "5 year look-back period" mean for Medicaid planning purposes?
In order to determine whether a person is eligible for Medicaid benefits, Medicaid looks to see whether the individual has made any transfers for less than fair market value (gifts) in the last five years. If you have made such a transfer, then you will not qualify for Medicaid benefits and/or you may face a penalty period. This is why individuals who gift assets, like a family farm, for instance, must wait five years after the gift before they will be eligible for benefits.
2. What is a life estate deed?
A life estate deed is a deed where the individual (grantor) transfers property to someone else (grantee), but the grantor retains the right to live on the property for the rest of his/her life. Sometimes, a life estate deed may cause problems for Medicaid planning purposes. This is why attorneys sometimes suggest an enhanced life estate deed.
3. What is an enhanced life estate deed, a.k.a. a ladybird or transfer on death deed.
An enhanced life estate deed, such as a ladybird or transfer on death deed, does not take effect until after you die. While you are alive, you retain the right to live on your property, but you also retain the right to sell, mortgage, encumber, or otherwise dispose of the property if you wish. You may also revoke or change these deeds prior to death. The grantee only has the right to the property when you die and takes no rights upon the execution of the deed. Attorneys sometimes suggest these deeds because the property will pass outside of probate upon your death, and Medicaid Estate Recovery will not seek recovery of this property. In order to determine the best deed for you and your family, please consult with an attorney.
4. I have a Will. Is that good enough?
No, probably not. The Will only protects you when you die. However, there are several documents we need to consider if you become incapacitated and cannot handle your own affairs. These documents include a Financial Power of Attorney, Medicaid Power of Attorney, Living Will, HIPAA document, and Declaration of Guardian. An attorney also needs to evaluate whether your assets would be better protected through a trust or from passing outside of probate.
5. I've heard bad things about probate. Is it necessary to avoid probate in Texas?
Texas has a relatively inexpensive probate process. Attorneys will typically ask for an Independent Administration in the Wills they draft for their clients. An Independent Administration is a fairly inexpensive way to submit a Will to probate court. In an uncontested estate, the executor only has to attend court one time and may act independently of court control for most matters. Granted, the executor still must uphold his fiduciary duty to all beneficiaries.
Disclosure: The information given on this website is not intended to be taken as legal advice and is for informational purposes only. Everyone should consult with their attorney prior to acting on any of the information given.