Elder Law Attorneys “Transfer and Cure” Client Worries
Wednesday, September 14, 2011
Since the Deficit Reduction Act of 2005, one of the most important strategies for Elder Law Attorneys and their clients has been the “Transfer and Cure” Strategy.
We all know that an uncompensated transfer (i.e. a gift) triggers a Medicaid penalty period (i.e., a period of ineligibility for Medicaid), and a penalty period normally means the client will end up waiting longer to receive Medicaid to pay for his or her long-term care. However, in most states the penalty period can be reduced (or “cured”) if the transferee somehow "cures" part of the transfer. This might be by giving some money back to the Medicaid applicant (either in a lump sum or over a period of time), using some of the gifted money to pay certain bills of the nursing home resident, or through other means.
This all gives rise to certain important questions, such as:
- “when should you use the “Transfer and Cure” strategy?” and
- "how much money can ultimately be protected by using this strategy?" and
- "what are the relevant variables that need to be considered when using this strategy?"
As a general rule, this strategy can be used for most unmarried clients. The amount this strategy can protect is typically between 40% and 60% of the client's assets. How much and how quickly to cure depends on many factors, including the cost of the care that the elder is receiving and the elder's monthly income.