Ask the legal expert: What can we do about new admissions who stash their assets for Medicaid eligibility?

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Attorney John Durso, Ungaretti & Harris LLP
Attorney John Durso, Ungaretti & Harris LLP

It seems we've likely been getting “burned” a lot in recent years by incoming residents who either are stashing assets or giving them away improperly to impoverish themselves and go on Medicaid quicker. Any suggestions?

Senior living facilities have little, if any, ability to influence an individual's decision to set up an irrevocable trust or some other type of tax shelter before the individual applies for occupancy in the long-term care facility. However, where individuals are clearly taking measures to circumvent their financial obligations to a facility, there are some best practices that could help alleviate some of these problems.

As a guiding principle, the residency application and agreement present clear opportunities to offer facilities a contractual remedy in the event the resident, through his or her own actions, becomes unable to pay. One common practice is to require an individual to complete a confidential financial profile at the time of a residency application so that the facility can determine whether the individual has the ability to meet his or her financial obligations under the terms of the residency agreement. Facilities should consult their state law, however, to ensure that this practice does not conflict with any regulations or consumer protection provisions.

In addition, many residency agreements include clauses that prohibit individuals from entering into financial transactions that impair their ability to meet the financial obligations of their residency agreement. If the agreement is drafted properly, certain financial transactions can trigger involuntary transfer or eviction proceedings for the resident. State laws should be consulted to see whether the state's laws in any way limit a facility's recourse.

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