Medicaid planning an important aspect of estate planning

According to an annual projection released by Fidelity Investments, health care costs for couples looking at retiring in 2012 are estimated to be at $240,000. That number is $10,000 higher than it was last year. The increase is reportedly relatively modest, with annual increases averaging around 6 percent since 2002, when the group began making calculations on projected costs.

Health care costs are an important thing to consider as part of one's estate planning . In particular, Medicaid planning is something to consider for those who may need it in the future. The goal of Medicaid planning is to protect one's estate for one's spouse, children and other heirs and beneficiaries. Two ways of approaching this goal are to purchase long-term care insurance and to use techniques to ensure one is entitled to benefits under the Medicare and Medicaid programs.

One technique one can use in Medicaid planning is gifting. Gifting "countable" within the "look back period," however, will disqualify one for a number of months. There are other issues associated with gifting that should be considered before it is used as a Medicaid planning strategy, such as gift and income tax and loss of control of those assets.

Certain assets are considered exempt from consideration when it comes to Medicaid qualification. Converting countable assets to exempt assets is a good strategy.

Payments to a "non-legally responsible person" for personal and other services are, under the Medicaid program, not a transfer of counted assets. Folks often pay family members to care for them based on this rule.

There are various other ways to ensure one's estate is not depleted by medical care. Those interested in doing so should speak to an estate planning attorney.

Source : MSNBC, "Health care costs for retired couples going up ," Mark Jewell, May 9, 2012.

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