Asset Protection Planning In Anticipation Of Medicaid Fails In Woodworth Case
The Court writes the introduction to this case: There is a popular perception among many elderly Americans that, in order to qualify for Medicaid and other public benefits, they should move assets out of their own names and into the names of their children. There are three serious problems inherent in such an asset transfer strategy. First, the federal statute governing Medicaid eligibility provides for a "look back" period of 36 months, or in the case of transfers to a trust 60 months, for persons who have transferred their assets for less than fair market value (there is an exception for special needs trusts in subsection (d) of the statute, that is not relevant here). See 42 U.S.C. sec. 1396(c)-(d). Second, creditors of the transferor (the parent) might claim that the transfer was fraudulent, in derogation of their rights. Third, the creditors of the transferee (the son or the daughter) might claim that the assets have been irrevocably transferred by the parent, and are now available to satisfy their claims. Sadly, it is this last eventuality that has come to pass in this case. Though this is a "Medicaid Asset Protection" case, the Debtor is the Daughter, and not Mom. By this time, Mom at age 71 is still working as a nursing assistant and living off approximately $200,000 left over from Dad's sale of his business before he passed.