The Medicaid rules treat different types of property differently. There are different rules for your house, your car, your “stuff”, and your investments. Which rule applies to a given asset depends on what classification that property has.
Wait, Did You Say “Stuff?”
Yes. “Stuff.” The legal term is “tangible personal property” and it includes those items that you can physically hold or possess. Think: things you can feel or touch.
Sometimes it’s easier to think about things that are not tangible personal property. Somewhat obviously, tangible personal property does not include things that are intangible: securities, bonds, certificates of deposit, insurance benefits, or intellectual property (i.e. copyrights, patents, trademarks, etc.).
Tangible personal property also does not include real estate – your house or rental property.
So, we describe it as your “stuff.” Your furniture, household goods, collectibles, and jewelry. Tangible personal property includes vehicles, equipment and tools, and anything else that can be physically relocated.
What will Medicaid do with My Stuff?
Your tangible personal property is, generally, considered to be a resource. If you could sell it and use the proceeds to pay for your care, Medicaid wants to know about it.
But there are some exceptions. For example, household goods are generally considered to be exempt – non-countable – under the Medicaid rules. That means you can keep most of your stuff and still receive Medicaid coverage for your nursing home stay.
The countable items include collectibles and jewelry.
What do I do with My Stuff?
Since you get to keep it, it will be part of your estate. That means two things: first, you have control over where it goes when you die. Iowa law allows you to include language in your will that creates a “personal property memorandum.” This memorandum is a list of specific, tangible items of personal property and who each item should pass to following your death.
The personal property memorandum is quite convenient: if the right language is included in your will, you can create this list at any time, and can add to it whenever you like. If you dispose of an item before your death, that item is automatically eliminated from the list. The effect is that you don’t have to go back to the lawyer’s office to change your will each time you leave something specific to a loved one.
Second, your tangible personal property becomes subject to the Estate Recovery Program. Estate Recovery happens when a Medicaid recipient dies. The state is entitled to be paid back from the deceased person’s assets for the total amount of assistance paid on that person’s behalf.
The effect is that, even though your stuff is exempt when you apply, your heirs may still have to liquidate everything to pay back the state! A trust or outright gift may be available to preserve your family’s heirlooms. However, the available solutions depend on each person’s specific situation.
Don’t gift things to your kids before talking with an elder law attorney. Transfers like that could negatively impact your ability to get help from Medicaid in the future!
If you want to learn about the options available to protect your family heirlooms from the nursing home and Medicaid, give us a call at (712) 737-3885 to get started with an initial Family Care Meeting today!