What Families Need to Know Before Giving Away Assets
Many families are surprised to learn that giving away assets before applying for Medicaid can actually create serious problems later.
One of the most misunderstood rules in Medicaid planning is the “5-year lookback period.”
When a person applies for long-term care Medicaid in Michigan, the State reviews financial transactions made within the previous five years. If assets were transferred for less than fair market value — such as gifting money to children, adding someone to a deed, or transferring property — Medicaid may impose a penalty period during which benefits are denied.
In other words, well-intentioned gifts can unintentionally delay nursing home coverage.
Common examples include:
- adding a child to a bank account,
- gifting a home using a Quit Claim Deed,
- transferring or adding names to investment accounts,
- forgiving loans,
- or selling property for less than its actual value.
However, not all transfers are prohibited. Certain exceptions and planning strategies may still be available depending on the circumstances. In some cases, proactive planning years in advance can help preserve family assets while maintaining Medicaid eligibility later.
The key is timing.
Too often, families attempt to “fix” things after a health crisis has already occurred. At that point, options may become far more limited and expensive.
Proper elder law planning is not about hiding assets — it is about understanding the rules before making decisions that could unintentionally jeopardize care benefits.
If you or a loved one have questions about Medicaid eligibility, asset protection, or long-term care planning, contact The Woods Law Office PLLC to discuss your options before a crisis occurs.
