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What is Medicaid Planning?
There are two types of permissible Medicaid Planning. The two types are broken down into planning for someone under the age of 65 and planning for someone over the age of 65.
Planning for someone under age 65: These individuals are disabled prior to or as the result of either an intentional or negligent act. Medicaid has paid benefits for that individual and the individual then receives settlement proceeds or a jury award that would normally make him or her ineligible to receive Medicaid benefits. Through proper planning the proceeds can be held separate from the individual's assets, so that they remain eligible for Medicaid. The proceeds are then used to provide for the individuals needs that are not covered by Medicaid. This is referred to as a "supplemental needs trust" or a "special needs trust". If anything is left in the trust upon the death of the individual, the proceeds first go to reimburse the state or states that have provided benefits and then any remaining balance goes to the individual's heirs or beneficiaries. There is no requirement that there be any money inside the trust at the time of the individual's death.
Planning for someone over the age of 65: When an individual over the age of 65 is facing the need for long-term care and needs or wants to qualify for Medicaid assistance. It is important to review their assets to see if they qualify under the asset test. For an individual, the assets are allowed to be no more than $2,000.00. But there are ways to legally reposition assets to meet this test. After qualifying under the asset test, an individual may only have $1,809.00 in monthly available income. However, through the use of a "Miller Trust" or "Qualified Income Trust" it is possible to divide excess income into "available income" and "non-available Income" thereby passing the income test as well. In many instances, the "spend down" that most people fear can be substantially reduced or totally eliminated by proper Medicaid planning. No longer is the individual facing the possibility of exhausting their assets and then applying for Medicaid.
Partnerships
When two or more individuals enter into a low risk business a partnership may serve their purpose. The terms of the partnership should be reduced to writing called a "partnership agreement". This agreement is important from the beginning to outline all the issues the partners will expect to be part of their business venture. In addition, this "partnership agreement" can be a vital document in the event of later disagreement between the parties as to their respective rights and obligations. One disadvantage of a partnership is that all general partners are personally responsible for the debts of the business and all of their individual assets may be loss if the business fails.
The partnership may be set up with a combination of general and limited partners. The general partners will run the business and still be personally liable for the debts of the business. The limited partners do not run the business and their liability is "limited" to the amount of their investment in the business and, therefore, their personal assets are protected from the business's creditors.
Corporations
Corporations can be used by individuals, small groups of individuals and large groups of individuals to operate a business. The major advantage of a corporation is that the shareholders are not personally liable for the debts of the corporation.
Corporations can be classified as C corporations (i.e, large corporations like Bell South) or S corporations (i.e., small corporations such as a family business). The choice depends upon the number of shareholders are their desire to have the corporation to pay for fringe benefits. C Corporations file their own income tax return and may paid corporate taxes, while an S corporation does not file a return and the shareholders are taxed as if they were partners.
Elder Law
Elder law encompasses many areas of law including wills, trusts, probate, nursing home matters, medicaid planning, guardianships, health care powers, durable powers of attorney, living wills and guardianships.
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