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How estate recovery efforts can destroy someone’s legacy

On Behalf of | Jun 2, 2023 | Medicaid Planning |

For many hard-working adults, savings accrued over a lifetime of hard work will become their legacy when they die. In some cases, people have savings accounts or investments that they pass to their children, grandchildren or other loved ones. There are also many people who do not have financial assets but have, instead, invested their personal wealth in their homes.

Those in the latter category are at particularly high risk of leaving nothing for the people they love if they survive well into their golden years. Many older adults may eventually require Medicaid to cover nursing home care or other skilled support required as they age that Medicare will not cover. If these individuals do not plan in advance to protect their homes and other assets, their legacy may end up going to the state to pay off their medical treatment.

Florida seeks to recover all Medicaid benefits someone receives

When someone dies, their property and their financial obligations past to their estate. The personal representative or executive of their estate will have to settle their responsibilities before distributing any remaining property to their family members and named beneficiaries.

Creditors typically take priority over those who would inherit from an estate, and someone may have to sell off all of a testator’s property to settle their debts. The Florida Medicaid estate recovery program will often have the biggest estate claims of any creditor. Years of living in a nursing home, for example, could lead to expenses that could consume all of the equity someone has in their primary residence.

Advance planning allows people to preserve their most valuable resources so that they are not at risk of liquidation to pay off creditors or repay Medicaid benefits when someone dies. People move property into trusts, add transfer-on-death designations and execute deeds to preserve property as they age and after they die so that it can pass to the people they love rather than to a government collection agency.

The same process of protecting assets from estate recovery efforts can also make it easier for someone to initially qualify for benefits when they apply. Understanding that certain assets could be at risk when someone dies or even as they age may help motivate people to create more thorough and protective estate plans after seeking legal guidance tailored to their unique needs.