I am constantly hearing about asset protection strategy regarding Medicaid or other entitlement programs. If you go too far on the strategy you could end up with only two beans in your pocket. Not everyone is comfortable with giving funds away and the five year lookback applied can be limiting. Now I don’t claim any expertise on asset protection regarding entitlement programs. My only suggestion would be not to rule out all of your options when you plan. For instance, you can use a government insured reverse mortgage to pay off an existing mortgage and free up monthly funds for living. In essence, you have created your own annuity. In addition, a reverse will allow you to create additional access to your home equity without affecting the entitlements if you do it properly. The key is to establish a credit line for emergencies when you need it as opposed to accessing your home equity and plopping the money in a bank account. If you create an asset outside of your home versus my suggestion of the credit line then you more often than not will have adverse issues with entitlement programs. You can always check with your provider and ask the question before considering a reverse mortgage. This is what we have done for many of our clients. The reverse credit line does not interfere in most states and it provides an added level of security and peace of mind. Having said that, If we all know exactly what our needs were going to be and exactly how long we were going to live then we wouldn’t need to have this conversation.
Click here for the full article on Aging Care website.