What are the most common mistakes families make when they are trying to find ways to pay for long-term care? We posted this question to Chris Bratton, attorney and founder of Bratton Law Group, a Life Care Planning Law Firm in the Philadelphia area.
According to Chris, the biggest mistake is taking advice from the wrong people, and much of that advice is related to misguided attempts to spend down assets to meet Medicaid’s strict asset limits. Many people think you have to spend down everything to qualify,” he said. “Instead of getting professional advice, they listen to friends or family members who get regulations confused between Medicaid and the IRS. They try to hide money and start giving money to people and giving their houses away. I’ve seen pretty much everything.”
Once people start gifting away money and property away without the right advice or the right strategy, they are at risk of unnecessarily decimating family assets. Fixing the situation is no small feat.
Chris remembers a client scenario where a well-meaning couple made classic mistakes. The husband was ill and needed long-term care that they didn’t have money to pay. They would need Medicaid to foot the bill. The wife was worried because she had heard that you must spend down your assets to $2,000. Instead of calling an elder law attorney to get help, she started giving money to her kids. “By the time she finally came to see us, there was a lot of damage to undo,” Chris explained.
Chris and his team attempted to get the money back. The daughter was able to return the money she had been gifted, but the son couldn’t. He had already bought a house with it. “These situations can cause problems for families, so we try to educate people as much as we can,” Chris added. “It’s important to know what your options are before you make any moves. Go to someone who specializes in this, and get help from them, not your cousin, the plumber, or your hair stylist’s sister’s best friend."
What’s the biggest mistake Chris has seen? Two notable examples top the list. In one case, a man wanted to start asset protection planning. Chris saw the man a few times, but then he died before their work was finished. After his death, Chris learned that the man had stuffed a contractor bag with $1 million in cash behind a pegboard wall in his garage. Another client was less than transparent during the asset disclosure process. During the Medicaid application, the client admitted to hiding $150,000 in his closet.
These attempts to hide assets are always discovered, and they always cause problems in the form of long delays for Medicaid benefits. While there is almost always a way to protect assets, there are certain ways to go about it. “We’re not going to hide anything that we do,” Chris said. “We make sure everything is out in the open.”
Take a tip from the pros. If there’s any inkling that you or someone you love might need to qualify for Medicaid to pay for long term in the next five to seven years, get advice from an elder law attorney, preferably one who works in a Life Care Planning Law Firm.