There is often great confusion about how the gifting or asset transfer rules work, especially when it comes to a married couple.
You may recall from prior issues of Elder Law Today, when one spouse needs nursing care and the other is at home, they go through a process we call the Division of Assets. The State looks at the assets they own and then puts those assets into two categories. The State says certain things are exempt and we do not need to worry about them. These include the house and the car, a prepaid funeral plan as well as some other assets depending upon the State.
Typically, a spend down occurs by paying the cost of care, paying off debt, purchasing allowable items or using a Single Premium Immediate Annuity (SPIA) to increase the income for the at home spouse.
As part of that planning, it also often makes sense to transfer the residence or other assets of the married couple solely into the name of the at home or Community Spouse.
When we pursue this strategy, clients often are concerned that transferring assets between spouses is going to cause a problem due to the five-year look back which penalizes transfers during the five years prior to filing the Medicaid application.
Fortunately, transfers between spouses do not cause Medicaid penalties and may be done prior to application with no penalty in both Kansas and Missouri. In addition, in most instances, transfers between a husband and wife can even be done after the Medicaid application and approval.
As always, if you have questions regarding any of this, please feel to give us a call at 913-338-5713.
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