Five year crystal ball

Maybe it has something to do with the weather, but lately one of the most common questions by new clients is how to protect major assets from being liquidated to cover nursing home expense. Many years ago, I was advised by the State of Ohio that it was malpractice not to advise clients on how to protect assets LEGALLY. It is not my job to pass moral judgment but to give the facts and apply the law. Medicaid is a State and Federal plan to provide funds to pay for nursing home and related expense. There are strict rules to determine who may qualify.

Bottom line, title to an asset must be transferred out of the legal ownership and control of a person for a period exceeding five years. Who knows what is in store for the next five years? What a gamble, but the payoff is the protection of the farm, the family business, the lake property or those heirlooms held by the family for many generations. 

I will not proceed on a plan unless I feel comfortable that it is the genuine goal to preserve assets held by several generations or to protect the assets for generations in the future. I must be convinced that this is the best plan of action for all parties concerned and it is not just done for the protection of cash for kids. 

There is another major question: will the current owner be able to sleep at night? Can he or she handle the loss of control? Is there a fear that their assets may be misused by the next generation? I need to know that all of the parties concerned are on the same page and that the welfare of the parent is foremost and will be protected. 

Space does not allow the explanation on the actual procedure as it is a complicated process. We must understand the income tax consequence and all of the potential hazards that may occur. 

It is to be remembered that after the transfers, the individual may not apply for Medicaid for a minimum of five years. That takes lots of planning and luck. In the event that a person requires nursing home care during this period, the care must be paid with private third party funds until the legal time has passed. We may prepare and complete a detailed transfer plan and the parent will die within the five year period or the individual will never require nursing home care. If either event occurs, the plan has in place a distribution procedure to distribute the protected asset to the next generation regardless of a Medicaid application. An irrevocable trust is the basic tool but other alternatives can accomplish this goal. 

The purpose of this article is to make people aware that steps can be taken to protect assets. This action needs to be done when a person is in good health with longevity sufficient to perfect the plan. It takes planning, time and a crystal ball into the future. 

Jeff Roth is a partner with David Bacon and associate Jessica Moon of the firm ROTH and BACON with offices in Port Clinton, Upper Sandusky, Marion, Ohio and Fort Myers, Florida. All members of the firm are licensed in Ohio and Florida. Mr. Roth’s practice is limited to wealth strategy planning and elder law in both states. Nothing in this article is intended for, nor should be relied upon as individual legal advice. The purpose of this article is to provide information to the public on concepts of law as they pertain to estate and business planning. Jeff Roth can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. (telephone: 419-732-9994) copyright Jeffrey P. Roth 2013.

back to top