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Quick Answers

What is a Ladybird Deed?

A ladybird deed is designed to protect your home and surrounding property. It’s quite simply a new deed for your property that allows you to protect the property from Medicaid Estate Recovery and avoid probate without violating the lookback period. The ladybird deed does this by allowing you to assign beneficiaries to your property. You get the protection without giving up control or ability to sell your property all with one special tool, the ladybird deed.

Can Medicaid take my property?

Yes. Medicaid can take property through a process called Medicaid Estate Recovery. This means that Medicaid can recover whatever they’ve paid out for long term from a Medicaid Recipient’s estate. Luckily, Medicaid is limited to recovering from people’s estate ONLY if their estate goes through probate. Avoid probate and avoid Medicaid recovery.

What is the Lookback Period and why does it matter?

The lookback period is the period in which Medicaid will retroactively review of the financial activity of a long-term care applicant. Specifically, Medicaid is “looking back” at whether or not the applicant gave anything away to either lower their asset threshold (a gift) or remove an asset from possible estate recovery. If a gift has been given within the lookback period, and cannot be cured, then the applicant is penalized—meaning, they will not qualify for Medicaid until they’ve paid the facility an amount roughly commensurate with the value of the gift. The lookback period is three years for assisted living and five years for skilled nursing level care.

How can I pay for Long Term Care?

There are a few options: 1. You can pay out of pocket; 2. You can utilize long-term care insurance; or 3. You can qualify for a benefit through Medicaid or the VA to pay the cost of care. Out of pocket pay is the most costly for you and your family because of the incredible cost of long term care ($5k to $10k per month on average). Long term care insurance may be a good investment. However, you’d have to qualify for it long before the need for long term care. Additionally, some long term care insurance policies have expensive and impractical premiums. Lastly, you can utilize Medicaid or VA benefits to pay for long term care. These benefits can cover the cost of long-term care with little to no money out of pocket.

What is a trust?

The best way to think about a trust is that it’s essentially a pot where you can put your assets. Putting your assets into a trust consolidates your assets into one place. This allows you to quickly protect your assets if needed and also allows you to avoid probate in the future. Trusts are flexible tools that can be set up in many ways. Their basic function is to hold assets and determine what happen to those assets when the maker of the trust dies (just like a last will and testament).

What’s the difference between Guardianship and Power of Attorney?

Power of Attorney is a power granted by an individual (the “Principal”) to appoint an agent to act on the Principal’s behalf. The agent’s powers are governed by the power of attorney document. The agent can only act as the principal wishes and must not act against their wishes. An individual must be competent to execute a power of attorney.

Guardianship is only available if an individual is incompetent and, therefore, unable to make decisions on their own behalf. The Guardian is appointed by the court to act on behalf of the incompetent individual (the “Ward”) only after the court has found by clear and convincing evidence that the person in question is, in fact, incompetent. A Guardian can act against the wishes of the Ward as long as they act in the Ward’s best interest.

What is probate and why should I avoid it?

Probate is the default process by which title to a decedent’s assets pass to his or her heirs. The probate process is monitored by and handled through the court. The court requires filings such as an inventory of the decedent’s assets and an accounting of the estate, which are regulated by rigid and strict laws. As such, the process can be complicated and can take anywhere from six months to two years to finish. Moreover, all the creditors of the decedent must be notified through the probate process e.g. medical creditors, the nursing home, and Medicaid. Probate is the creditors’ opportunity to go after the assets of the estate before the heirs get their share.

If you avoid probate, you avoid the long, tedious, and expensive hassle. You also avoid the chance for creditors to deplete the estate and take your loved ones’ inheritance.

What is the difference between a revocable trust and irrevocable trust?

The difference comes down to protection and control.

Control: in a revocable trust, the person who makes the trust is the person who controls the trust (the trustee). For a trust to truly be irrevocable, the person or persons who created the trust cannot be the trustee. An individual creating an irrevocable trust must pick someone other than themselves or their spouse to be trustee. The best way to think about an irrevocable trust is: the person who makes the trust sets the rules of the game but once the game begins, the rules cannot be changed.

Protection: a revocable trust provides protection for assets by allowing the trust maker to. avoid the probate process entirely. An irrevocable trust provides a larger measure of protection by also removing the assets from the trust maker’s name. This can help individuals qualify for benefits like Medicaid, preserve assets, and avoid taxes.

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