The senior generation of a farming operation is increasingly concerned about the farm assets being drained to pay for an extended nursing home stay. One strategy to protect assets from being liquidated and then used to pay nursing home expenses has been to give away those assets to the younger generation. Not so long ago, those assets had to be given away at least 3 years before Medicaid application, else Medicaid eligibility or payment would be negatively impacted. After that, if assets were in a trust the look back period was 5 years but the original 3 years applied if not in a trust. However, now the lookback period for all assets, whether in a trust or not, is 5 years.
With assets in and not in a trust treated the same, first impression may favor trusts. However, if “strings” are attached to assets in a trust, those assets are considered to still be owned by those at the end of the string. That means the original owner can not be a trustee, have any legal ability to access assets or “pull them back” anytime in the future, can not be the beneficiary, can not sign checks for the trust, thus the trust must be irrevocable. Further, when the trust is funded a gift has been made and a gift tax form most likely needs to be submitted.
Medaid eligibility, lookback and asset recoupage is administered locally by the local Job and Family Services office. The Medicaid booklet, “Transfer of Resources, How Transferring Resources Affects Long-Term Care Medicaid” is available at the local Job and Family Services office and on the web at the Medicaid website at:
http://www.odjfs.state.oh.us/forms/file.asp?id=51622
Another resource is the “Ohio State University Extension Basic Estate Planning Fact Sheet Series”, which includes a fact sheet on the “Nursing Home Dilemma”. All the 12 fact sheets can be obtained at:
http://hocking.osu.edu/agriculture-natural-resources/estate-planning/basic-estate-planning
The Nursing Home fact sheet also discusses where Medicare and Medicaid pay nursing home bills, Medicaid income and assets allowed for eligibility and payment and the feasibility and cost of nursing home insurance. If considering nursing home insurance refer to the Ohio Department of Insurance’s “Ohio Shopper’s Guide to Long-Term Care Insurance” at:
http://www.ohioinsurance.gov/consumserv/ocs/completeguides/complete_guide_ltcare.pdf