Both the Medicaid and VA Spenddowns are premised on forcing the individual or couple to spenddown assets in order to qualify, thus putting the primary burden on your assets first. Both programs have a lookback period where assets transferred within that period are subject to penalty. The lookback period for long-term care Medicaid in Ohio is 60 months and the lookback period for the VA Aid & Attendance program is 36 months.
The solution is oftentimes to transfer assets and wait out the program’s lookback period – this is known as the GIFT AND WAIT strategy. You turn the lookback period into a waiting period. But most people do not want to transfer the vast majority of their net worth to a person or people because it would expose those assets to the creditors and soon-to-be ex-spouses of the people receiving the assets.
Transferring assets to an Asset Protection Trust is usually the preferred method of accomplishing the GIFT AND WAIT strategy. Transfers to the Asset Protection Trust are treated like other transfers. Once the assets are inside the trust, a trustee manages the assets for later use or distribution. The assets are no longer considered available towards the spenddown and are considered protected. After the requisite waiting period has passed the transfer of the assets into the trust are no longer included for a transfer penalty. Assets in an Assets Protection Trust are also considered protected from estate recovery.
Slates Financial Services can refer your family to an experienced Attorney who can determine if an Asset Protection Trust will help your family achieve their asset protection goals. Our Attorney referrals have helped set up trusts for families across Ohio to protect assets from the long-term care spenddown. To speak with a member of the Slates Financial Services team that will help you protect your assets, click here.