Did you know that 70 percent of United States senior citizens who need long-term care are on Medicaid?

Did you know that if you need Medicaid in the future, then the state is likely to come back at your death and take your house?

While you are alive, in most cases, your house is an asset that is not counted for purposes of determining Medicaid eligibility.

But, if you do not plan in advance, the state might be able to take your house.

That’s right. If you do not plan in advance, then the state could take your house if you needed Medicaid.

However, there is a way to protect your house so the state will not get it if you need Medicaid. It is very effective so long as you act five years in advance of needing Medicaid.

If you deed away the future interest in your home now, then after five years have gone by, the transfer will not be counted against you for Medicaid eligibility purposes, and it will be beyond the reach of the state to recover.

In effect, the state will not get it when you pass because your interest (the life interest) will die with you, and the future interest has already been deeded away.

So long as you do this five years in advance of needing Medicaid, then 1. the transfer will not count against you for purposes of eligibility, and 2. the state will not be able to recover your house.

The result is the house is protected. It stays in your family.

You have full use and enjoyment during your life. The kids get it when you pass.

Are there any conditions or drawbacks?

Yes. The house must be free and clear of debt to do this. Otherwise, the due-on-sale clause of the mortgage would be triggered on the transfer.

Also, you must realize that if you do this, then your ability to take out a reverse mortgage will no longer be available.

So, in short, if you think you might need Medicaid in the future (five years or more in the future), and your house is paid off, and you will not need a reverse mortgage, then you should seriously consider deeding the future interest in your home to your children or to a trust for their benefit and keeping for yourself a life estate.

You will have full use and enjoyment during your life. Your kids will inherit it. The state will not get it.

This is one of the techniques we use to help our clients protect their assets and make sure they are leaving something to their children.

There are other techniques and strategies to protect your assets.

But this is one that is very powerful and effective if planned for sufficiently in advance.

A little bit of planning can make a big difference.

Mark F. Winn, J.D., Master of Laws (LL.M.) in estate planning, is a local asset protection, estate planning and elder law attorney. www.mwinnesq.com