As the population gets older, the importance of elder law in our day-to-day lives continues to grow. Unfortunately, elder law is a topic that not many people have a lot of direct experience with. Moreover, it is all too common for people to hold some myths and mistaken beliefs about this important area of the law.
To help get a better understanding of what elder law is and how some common wisdom you might’ve heard is wrong, let’s take a look at some of these widely held myths.
Myth 1. I can give away my property to avoid estate taxes and qualify for Medicaid.
This myth has a lot of problems going on with it. The idea that you can give away your property to your family or others to avoid having to pay taxes is based in reality. As of 2014, the federal government allows individuals to give up to $14,000 per individual, per year without incurring a gift tax.
However, giving gifts is not always something you can do to qualify for Medicaid. If you want to use Medicaid to pay, for example, the costs associated with long-term care in a nursing home, you have to meet some very specific eligibility criteria. Income and asset restrictions are included in these criteria, as is a five-year look back period. The five-year look back period reviews what you gave away in the previous five years. If the amount of gifts you gave away exceeded the qualification limits, you won’t be able to qualify for Medicaid, even if those gifts aren’t subject to the gift tax.
Myth 2. I created my estate plan years ago, so I don’t need to worry about it now.
Congratulations on having an estate plan in place. While you should feel good for having the foresight to act when you did, an estate plan is not something you can forget about after you’ve created it. You should view your estate plan like your car in that it will require periodic maintenance to keep it working properly. If it has been several years or longer since you looked at your estate planning devices, you must take the time to review them and speak to an estate planning lawyer about any possible changes you should make.
Myth 3. I don’t need to consider elder law because I’m not old.
Even if you don’t think of yourself as old, there are many elder law issues that can affect you. This is especially true if, for example, you are a child of elderly parents. You might one day be called upon to act on your parent’s behalf, asked to serve as executor, or as an attorney-in-fact. If you don’t know what to do in these situations, you need to talk to an elder law attorney.