Executive Summary
One of the most challenging realities of retirement planning is the risk that long-term care needs in the final few years of life can consume a disproportionate amount of a household's entire retirement savings. At best, this culminates in a fear that someone might not be able to afford their desired level of care in the later years. At worst, it is paired with the rapid depletion of existing assets, which can impair the subsequent standard of living of a surviving spouse, or 'unexpectedly' deplete assets that might have otherwise gone as an inheritance to family members. Yet the so-called "Medicaid planning" tools in the financial planner's toolbox to navigate this situation can quickly pit competing interests against one another, as strategies that preserve assets for heirs can outright limit the availability of assets to provide for a desired level of care while the individual is still alive. Putting financial planners into the awkward position of crafting recommendations in ethically complex situations.
In this guest post, David Haughton, VP of Estate Planning at Carson Group, explores the ethical dynamics that financial planners must navigate when crafting Medicaid planning recommendations to clients.
The starting point is to recognize that to the extent Medicaid was designed as a needs-based government benefit (i.e., to provide for the care of lower-income individuals who could not provide for themselves), proactive "Medicaid planning" involves finding ways to reduce the assets of the individual who may otherwise need long-term care support, before those assets are otherwise spent outright on care itself. The tools are varied, including transferring assets into Medicaid trusts, or gifting outright to family members, or the use of Medicaid annuities to convert the institutionalized spouse's assets into the non-institutionalized spouse's income. But the common thread is that assets no longer held in the individual's name are no longer required to be spent on care… for which the caveat is that often they literally cannot be spent on care.
The end result of this planning is that strategies to preserve assets for a non-institutionalized spouse, or future heirs, come at the 'cost' of reducing the assets available to spend on care if desired. In many cases, this may mean restricting the range of facilities available (to only those that accept Medicaid), or the tiers of additional care services that may be chosen (that aren't available in a primarily-Medicaid facility). Which is especially concerning when often the planning process begins with an adult child, thrust into a decision-making situation after a parent's health event, who must now make decisions for their parent's care with a direct impact on their own future inheritance.
The added complication is that for many financial advisors, our own compensation systems can present an additional conflict of interest in the process. Some tools – such as Medicaid annuities or asset-based long-term care policies – compensate insurance-licensed advisors who can receive commissions, but not fee-only advisors. Other tools – such as Medicaid trusts – do the opposite, preserving assets that can be managed by advisors who are paid on assets under management. Which means at the least, advisors must be mindful of their own compensation conflicts of interest in navigating recommendations.
So what should advisors do? Ultimately, the key is to engage in proactive conversations with all stakeholders – ideally including parents and children (while still recognizing which, in particular, has hired the advisor as the client, to whom the advisor owes their primary fiduciary duty) – to ensure that all trade-offs and potential priorities are considered. And then ensuring that not only are recommendations documented, but all the strategies that were considered, and the trade-offs that were discussed.
Ultimately, the key is to recognize that Medicaid planning is, perhaps even more so than other types of financial planning, rife with trade-offs for which there are no clear answers. And because multiple family members are involved, the trade-offs aren't even a matter of just one person evaluating a trade-off (e.g., "should I spend less now to be able to save more for a higher standard of living in retirement?"), instead the decisions have impact across multiple people (an individual in need of care, his/her spouse, and their children or other heirs), each of whom have their own competing interests. Which raises the bar for how thoroughly advisors must explore – and document – the range of strategies that were considered, and how the trade-off decisions were made when there is no single right answer.
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And if you want to go deeper on this topic, hear directly from the author on the Financial Advisor Technician podcast . |
Listen To The Financial Advisor Technician Podcast On This Topic
Episode Shownotes And Transcript
Click to expand transcript and show notes↓↓
Shownotes:
- David Haughton: LinkedIn
- Using Medicaid Annuities To Protect Retirement Assets When A Spouse Requires Long-Term Institutional Care, by Jeff Levine
Full Transcript:
Adam: Hello and welcome back to the Financial Advisor Technician podcast, I'm your host Adam Van Deusen.
On today's episode we're going to discuss Medicaid planning in the context of long-term care, a topic that often comes up for financial advisors working with older clients who might be preparing for a potential need for long-term care but can also arise when working with younger clients who are supporting an aging parent through the long-term care process. While there are several planning strategies that can help individuals requiring long-term care to avoid drawing down their assets to qualify for Medicaid, these strategies come with tradeoffs that might be acceptable to some clients while perhaps not being a preferred option for others. In addition, an advisor might find themselves in the situation of dealing with competing interests amongst family members, such as an older client who might want to preserve flexibility in their long-term care options or adult children who might prioritize preserving assets.
To help us dig deeper into this topic, I’m joined today by David Haughton, the Vice President of Estate Planning at Carson Group to discuss the different types of Medicaid planning strategies and their tradeoffs, ethical considerations for financial advisors when working with clients on this topic, and how advisors can take action with their clients today to create the best possible outcomes down the line. Welcome David and thanks for joining us on the Financial Advisor Technician podcast!
David: Thank you so much for having me. I'm so excited to talk about this important topic.
Adam: Terrific. So, to start, perhaps you could provide a quick introduction on what Medicaid planning is in the long-term care context and the different types of clients for whom it might be applicable.
David: Absolutely. So, at its core, Medicaid planning is really designed to help someone qualify for long-term care benefits under the state Medicaid program and be able to preserve as much of their assets as legally possible. And that's usually for the benefit of their family that comes after them. So, if someone is in need of nursing home or other long-term care, typically what happens is they need to spend down their assets if they have too many what's called countable assets to be able to qualify for Medicaid long-term care benefits. And so, absent doing any planning, that means that clients would typically need to spend down a substantial part of their assets on care before they start seeing any benefits paying for their care.
So what Medicaid planning really is, is looking at the law and looking at the guidelines and seeing what assets can be legally transferred, can you convert them, the character of the assets, reposition them in certain ways so that they're no longer counted against the Medicaid applicant's eligibility and, therefore, able to have the Medicaid program pay for their care. And when you're looking at who are the applicable clients for these types of programs or for these types of planning, it's really people who obviously is in the aging population, people who are concerned that they are going to go into long-term care. They're concerned about the dissipation of their assets and how much they're going to be able to transfer to their family to preserve that wealth, where they would rather have that wealth transferred to the family rather than spend those assets on long-term care benefits personally. So, at its very core, that's kind of how long-term care Medicaid planning works.
Adam: Yeah. Thanks for that rundown. I do think it's interesting because I think a lot of folks, and especially a lot of clients, I would guess, think about Medicaid in the context of health insurance, which is typically for lower-income individuals. But as you're noting here, even individuals who might have amassed some assets could potentially benefit from the Medicaid benefits when it comes to long-term care, just given how that can add up into the tens or hundreds of thousands of dollars that could really eat up an individual's assets that they've saved.
David: Absolutely. Yeah, I think Medicaid planning has a lot of use going up the net worth scale. I think once you reach a certain level of net worth, and that's a sliding scale, depends on the state and the benefits that are available and how the spend-down process works, but in a lot of circumstances, it's not necessarily just those who are impoverished who are looking to do Medicaid planning. It can be those who have accumulated quite a bit of assets, because there are a lot of strategies available that are legal strategies to be able to reposition assets or to spend them down in a way that benefits the family without having them represent countable resources when they're trying to determine Medicaid eligibility. So if a client has prioritized this and they're comfortable with that type of planning and the trade-offs, which I'm sure we're going to talk about, that come with that type of planning, it really opens up the universe of people who may be willing and prioritize this type of planning.
Medicaid Planning Strategies In The Long-Term Care Context [5:09]
Adam: Yeah. That's a really good segue. Perhaps you could talk about a few of these strategies that clients could use to perhaps protect some of their assets but still qualify for Medicaid for the long-term care benefits.
David: Absolutely. Yeah. And I think the first thing I want to discuss is that because of the way that Medicaid works and Medicaid planning works for long-term care benefits is that if you're going to spend down your assets, then you're essentially going to give up control of those assets in basically every circumstance. So there's always a trade-off. So any strategy that we're talking about when it comes to Medicaid planning, it doesn't mean that the person can whistle along and keep their assets and keep full control of their assets. Usually, there is going to be some kind of trade-off where they're going to either gift the assets away or give up some level of control of those assets.
And so just to run through, a few of the different tools are available. Number one, the most basic is outright gifting of the assets. So you could give the assets to the children, potentially, and you could give those assets away, and they will no longer be countable as the Medicaid applicant's assets when it comes to Medicaid planning purposes. However, there is what is called a five-year lookback period. So if you give them away the day before you apply for Medicaid benefits, well, they're going to say, "You can't do that. You had to have given them away more than five years prior to applying." And so there's a long runway there as far as deciding to do this type of planning.
And of course, if you're giving the assets away, let's say you're giving away a brokerage account to the children, there are a number of different risks associated with that. What if the child enters into a divorce? What if they have creditors? What if they have substance abuse issues? The other thing is, what if the parent never needs long-term care benefits? Usually, those assets might be entitled to what's called a step-up in basis for capital gains purposes if they're to pass away with the assets in their estate versus if they transfer them in kind to the children, there's going to be carryover basis. And if the kids liquidate those assets, there's going to be a capital gain. So when it comes to outright gifting, there's benefits to it in that you're getting the assets out of what we would call the Medicaid estate, they're no longer countable resources, but there is that drawback in all those risks associated with doing so.
Now, another potential strategy that's available would be an irrevocable Medicaid trust. And that is kind of like simulating giving the assets away. And basically the way that a Medicaid trust works is you would put assets into this irrevocable trust. The trust would say that you are not the beneficiary of that trust. So if you put assets into a Medicaid trust and you expect them to be excluded as countable resources, then you cannot be the beneficiary, at least as it pertains to principal. Whether you can be a beneficiary as it pertains to income is dependent on the state. Whether you can be the trustee of that trust is going to depend on the state. Everything I'm talking about is very state-specific, and it's important that an attorney that is well-versed in your local state is involved in this to understand these nuances. But a Medicaid asset protection trust is something that you could use where you could put the assets in. If the five-year lookback period passes, so five years goes by, those assets are in a trust, protected, and not countable as Medicaid resources. So that could potentially be another tool.
And then the last tool I'll briefly mention is a Medicaid annuity. And so a lot of times when a Medicaid applicant, a person who is seeking long-term care, a person who is seeking to do planning for long-term care as far as Medicaid planning is concerned, if they have a spouse, that kind of opens up more planning opportunities. And one of those opportunities is that if the person who is seeking Medicaid care, if they have assets above the countable resource limit, they can sometimes purchase a Medicaid annuity. So they can change the character of their assets. So let's say they had $500,000 in a brokerage account. They could transfer those assets into what we would call a Medicaid annuity, and it would change the character of those assets from a countable resource into a stream of income payable to the non-institutionalized spouse. And it's kind of a workaround where you can change the character of the property and get the assets into the spouse's name.
Now, this would never be a product, I think, that anyone would use as an investment. It would be a SPIA, so a Single-Premium Immediate Annuity, for the shortest possible term that you could choose because you're playing the game of, is that person going to end up needing care before the annuity gets completely paid out to the spouse? But it is kind of a workaround in the law where if someone is going into the nursing home and they have excess resources and they have a spouse, there is a quirky way in which you can change the character of those assets from a countable resource into a stream of income and really protect a significant portion of the assets.
Adam: Okay. Thanks for the rundown on each of those. And as you mentioned here, and this is going to be a core part of our conversation, is that there are a lot of trade-offs going on here in the sense that there's no sort of free lunch, as it were. Either the individual who might be planning for long-term care is giving up control of their resources perhaps earlier than they might have otherwise or perhaps, if they hold onto the resources, might need to spend them down. Of course, they'll be receiving care in compensation for that. But at the same time, it might have had other objectives for them. So I think that's a great point.
Ethical Considerations For Advisors When Working On Medicaid Planning [11:15]
Adam: Now, as we've talked about having different sort of roles and different individuals here, why don't we talk about from the advisor's perspective…I could see this kind of getting thorny, depending on who they're working with. So for example, if you're working with, let's say, an older client, you're helping them decide, "Is my priority to be able to gift assets, or is it the flexibility to hold onto the assets and perhaps use them to choose a long-term care option that suits me rather than perhaps going on to Medicaid?" But I could see, if your client was an adult child, maybe they're a power of attorney, they might have different questions. So perhaps you could talk about the importance of that, both in practical terms, but also ethically for the advisor.
David: Yeah. I think it's incredibly critical that the advisor is looking at, "Okay, who am I talking to, and who is the client?" And you might think that, always, who I'm talking to is the client, but not necessarily, because there's nuances, especially when it comes to elder care issues. Because a lot of times, people are getting older, and they are actually appointing a child to be their representative, usually under a power of attorney. And so the advisor really needs to ask the question. When, let's say, an adult child comes in and is looking for advice for how to protect assets for their parent for Medicaid purposes, they really need to ask, who is my client here? Who do I owe a duty to? Is it the parent themselves? Are they the actual client? Is it the child who is looking for ways to protect the assets that are eventually likely going to stay in the family or reach them, or maybe the priority of the parent they have expressed is to keep assets in the family? Or is that child acting as agent for the parent under a legal document like a power of attorney? And does that child actually have a fiduciary duty to the parents to make sure that they are planning on their behalf and not on their own?
So this can get messy, and this is really, really important to understand, especially when the parent maybe has diminished capacity, because then you can blur the lines as far as, "Who is the client? Who should I be acting on their behalf? And how do I guide this person in the best way possible?" And so it's really important to make sure that you understand all of these different components and understand what capacity they're looking for. What is the actual...the person who is potentially going into the nursing home or already into the nursing home, what are their priorities? What duty do you owe to them versus, what is the child's role in this? Are they coming to you in their own capacity, or are they coming to you on behalf of someone else who is the client, either through a power of attorney or other means? And these are really, really, really critical things to understand to make sure that you're acting on the appropriate person's behalf and you're acting in an ethical manner.
Adam: Oh, very interesting. Yeah, because I could see advisors being in sort of either of these positions, as it were. Some might be working with a client maybe who's in their 50s or 60s, who has an aging parent, or having older clients themselves.
Best Practices For Starting The Medicaid Planning Conversation [14:33]
Adam: So it sounds like, from what you'd said before, thinking about the lookback period being five years, it would seem like a best practice for an advisor would be to start this planning process in advance. So perhaps we could start with each of these sort of client cases. Let's look at a client who is preparing to age or might have a future long-term care need. At what point or at what age might the advisor start this conversation, and what might that look like?
David: I think as early as possible. There certainly can be circumstances where it is essentially too early. I think what's really important is that there are two types of Medicaid planning. There's planning for a crisis, and then there's proactive planning. And so proactive planning is what we were just talking about. That's where you may be doing planning where you're actually gifting the assets away either into a trust or you're gifting them outright to get them out of being a countable resource for Medicaid purposes. In that circumstance, in most states, if not all states, you need to have at least that five years pass by. In that circumstance, you're probably not going to make that decision unless one of two circumstances is present. You have some kind of pending diagnosis or concern that long-term care needs and nursing home services are going to be necessary in the somewhat near future. If it's too near, then you may not have five years, but in the somewhat near future.
Otherwise, you may have it top of mind. You know it's a very important topic, but instead of doing proactive planning where you're actually outright gifting assets out of what's called the Medicaid estate, as opposed to, let's say, the Federal estate tax estate, and I can talk about the difference between those, you may want to discuss it with your attorney, and you want to make sure that you have the flexibility within your documents to be able to do some of the crisis planning, spend-down planning, when the time comes, if it comes more urgently and you don't have time for the five years. And one example of that, I talked about this Medicaid annuity, this single-premium immediate annuity. If the person who is entering the nursing home has a spouse, they didn't have time to do the proactive five-year planning. They want to make sure that their power of attorney or their trust or wherever their assets are located, that they have a fiduciary available, whether it's their trustee or their power of attorney, who actually has the power to do Medicaid planning on their behalf.
So they have the power to liquidate assets. They have the power to transfer assets to the spouse to open an annuity. They have the power to spend down assets on certain things that will help them to become eligible for Medicaid. That's where the Medicaid planning is an important aspect as early as you create your documents, but sometimes you want it to be in a flexible fashion, and you don't want to make the huge trade-offs where you're using that five-year rule because you know that means you're going to be giving up control. And if you're doing that in your 50s and there's no significant health concern, then you're going to be giving up a lot of control for a long period of time, potentially, and you may never actually need to use those tools. You may actually never end up in a long-term care situation where you need Medicaid. So it's important to understand what's the urgency, what are the priorities, and what are the tools that are available.
Adam: Very interesting. And I'd imagine, on the younger end, part of that conversation is the broader long-term care planning conversation, so things like maybe they're interested in a long-term care insurance policy, or are they going to self-insure? So a lot of the questions there. So you mentioned sort of the crisis situation. So let's say someone has a medical incident that appears that they're going to need long-term care for a while. Maybe they fall into this zone. Sort of as you mentioned, they might not have enough assets to self-insure, but they do have assets that they want to maintain, let's say, for a spouse. So, what are their options in that crisis situation?
David: Yeah. So in that crisis situation, the Medicaid annuity is certainly the number one probably used if they're married, where you can change the character of the assets. Other than that, a lot of times, what you're looking at is you're looking at, "How can I convert countable resources into exempt resources?" And some of the ways to do that is, and each state can potentially be different, but some of the ways to do that is to look into, what are the available assets that Medicaid does not count as countable resources? One of them could be a vehicle. So they could spend money on a vehicle. That could be one spend-down, a way to use spend-down provisions. Another could be prepaying for a funeral and doing one of those prepaid funeral contracts. That's another way to spend down assets.
So each state has different aspects of what they call a countable resource and what they say are exempt resources. And in many circumstances, they're not going to count it against the five-year lookback period. If you convert a countable resource into an exempt resource, you just need to be careful and understand, in each state, what these different categories are can vary greatly. Because in some states, a retirement account, a qualified retirement account, IRA, 401(k), depends on the circumstances, may have added protection versus a typical brokerage account. Whereas in other states, like in Massachusetts, they may not see a difference between the two. And so looking at those different assets and what is countable, what is not countable, can be really important in how to convert between the two.
The other thing that is interesting is that sometimes you kind of understand that there is going to be a period of time that we have to pay for long-term care privately. It's just there's no way around it. We have to pay for long-term care privately. And that may be the case of trying to get over that five-year look-back line. And even though you understand that for a portion of that five years, you're going to be paying privately, you may be doing that. And the other aspect may be a tax aspect to it. While you're paying privately, perhaps you're looking to those assets that have not been taxed yet, like an IRA, because you know that there could be a medical deduction that could offset the taxes that are associated with withdrawing from that IRA. So it's the best resource to use in order to pay for that private pay until you get to the point that you can qualify for Medicaid benefits. So having someone who is sophisticated and is knowledgeable of the state-specific rules can really make a world of difference when it comes to Medicaid planning.
The Value Of Documenting Clients’ Long-Term Care Preferences [18:07]
Adam: Very interesting. And I guess, taking a step back from some of these state law and tax law issues, I guess another thing here on the more qualitative side is just gauging the client's preferences for care. It’s possible that they might have a specific place that they want to go in mind that might be self-pay and that they might prefer spending down their assets to receive that certain care in that particular location. Would that be another consideration for the advisor to talk about?
David: It definitely would. And a lot of it's anecdotal. And some people, it's based on a reality that they've seen others. Like I said, it's anecdotal. But if you're coming in as a private pay client to the nursing home, there's usually more availability for beds coming in as private pay because they allocate only a certain number of beds for Medicaid-paying patients. Now, they are not supposed to discriminate. It's not supposed to affect your level of care. But there are realities associated with that, that it can be harder if you're going into a facility and you're applying for admission there and you've chosen the one that you want, that they may have less availability if someone is coming in as a Medicaid-paying patient versus a private pay patient.
And so it's definitely something to understand and understand the priorities of the client to know, is their priority wealth preservation, or is their priority to get the best care possible in their later years? Or is there some mix between the two that you can figure out? But those are really important concepts to understand. You're going to get different answers from different people. I think, certainly, if you talk to the facilities because they have these laws associated with not discriminating against Medicaid patients, you're not necessarily going to get an answer to suggest that if you go private pay that you're going to get better care or you're going to have more availability. But there is a reality to it. And it's something to watch out for.
Adam: Oh, interesting. And then, I guess, from the advisor's perspective, is there some sort of thinking about documentation and writing down an individual's wishes perhaps in advance of it? What sort of tools might they use for that?
David: Oh, I think it's incredibly important. I think that broadens it to a general estate planning discussion that, when you have a client and they are designating their wishes regardless of what their age is, they're going to have their legal document. And a lot of it's going to be dry. A lot of it's going to be boilerplate. But then, on the side, if you are documenting their wishes, whether it be with a side letter that they've written themselves or with notes that you are taking to understand what their priorities and goals are, that can be really important. And it can be really important information for their named fiduciary if they are unable to make their own decisions or they're no longer acting in the role of managing their own assets. It can be really important evidence of what their wishes are. And so long as it's not in conflict with the language of their documents, those can be really, really important pieces of evidence for the fiduciary, whether that be the power of attorney or the trustee to use to understand, "Okay, this is what this person's wishes were, and here's how I'm going to carry them out."
Of course, you can always hard-code it a little more, but I'm always of the opinion to be flexible when it comes to those. So, understanding someone's wishes, but having flexible documents, I usually advocate for. But the person who is creating the documents, the person who is going to ultimately be receiving care, I think it's really important that you give them the opportunity, not just within the dry legal documents, but within their own words, to be able to express what their actual wishes are so it gets followed out to the greatest extent possible.
How Advisors Can Support Adult Children Supporting Parents Needing Long-Term Care [25:22]
Adam: Now, switching over to the other case. So let's say the advisor is working with an adult child, and their parent is perhaps on the edge of needing long-term care, or it might be in the near future. What are some best practices for advisors working with a client who comes to them with questions in this situation?
David: Yeah. I think we talked about it briefly earlier. The first thing is, who is my client here? Is there a power of attorney in place? Is that why the child is asking these questions on behalf of someone else's assets? And so, are they in the position where they are already a fiduciary? And do they have a fiduciary responsibility to the assets of the parent and to make sure that they're fulfilling their wishes? I think that's the first thing to really understand because you need to know, is it asset preservation is the parent's goal, or is asset preservation the child's goal? Because I don't think the child's involvement in itself is problematic. I think that is incredibly common. The issue is whether the child's involvement is going to cause the advisor to accidentally optimize the child's objectives instead of the actual client's objectives if the client is actually the elder.
If the client themselves is a child and they're trying to think through strategies to help the client to direct their parents' attorney or their parents' advisor to help them through the process and help them with their wealth preservation goals, I think that is fine. It's just really, really important that the line is drawn and understood. Who is my client here? What is my objective? And what am I trying to accomplish, and for whom? Because it could be a really sticky situation if it's determined that, in actuality, the parent is the client and the child is pulling the strings on something that the parent might not be prioritizing. That's just what you want to be careful of. So a child will typically be involved in these situations. It's completely appropriate. I think it's just important to have that conversation and understand, "Who is my client, and what capacity are you working with me, and whose priorities are we trying to fulfill here?"
One Key Takeaway For Advisors [27:36]
Adam: So we've covered a lot of ground today. From your perspective, what is one key takeaway you think our advisor listeners should have from this conversation?
David: I think a really key takeaway is that Medicaid planning is not simply about preserving the most assets or qualifying for the most benefits. It's really about the client's goals and priorities. This can be a really sticky area of planning because there are moral issues, there are ethical issues, and there are concerns that both the advisor and the client may have as to whether they're taking the right path. So before jumping into planning strategies, it is really, really important to understand who your client is, what their priorities are, what they're hoping to accomplish, and laying out what are the legal methods and the appropriate planning techniques they can take to accomplish those priorities, and then letting them decide whether they want to move forward with those.
I think that's what's really important because we can all give people planning techniques for anything, for taxes, for long-term care. But at the end of the day, it's about what are the client's priorities, what are we trying to accomplish, and not trying to force any type of thought process on them, force any type of planning priorities on them. Let them come and tell you what are they looking to accomplish, and then just giving them both the options as well as giving them the tradeoffs so they can choose the strategy that best reflects what their priorities are.
Adam: Well, terrific. I think that is a great way to sum things up. So thank you so much for joining us today on the "Financial Advisor Technician" podcast, David.
David: Thank you so much. I'm always excited to be here.
An adult daughter calls her advisor. Her mother is 82 years old. She has accumulated a few hundred thousand dollars over a lifetime of work and saving. A recent health event has raised concerns about the possibility of needing long-term care in the future. She asks: "How do we protect my mom's assets from the nursing home?"
At first glance, this appears to be a technical planning discussion. Medicaid has asset limits. Certain trusts may be able to remove assets from consideration for eligibility purposes. Gifts could potentially reduce countable resources. Various planning techniques like Medicaid annuities can help preserve assets while positioning an individual for future benefits.
But the real challenge is not always determining whether a strategy technically will work – it's determining whether the strategy aligns with the client's priorities.
Before evaluating competing family objectives, advisors should first identify who their client actually is. Under the CFP Board's Code of Ethics and Standards of Conduct, a CFP professional's fiduciary duties run to the client. However, in many Medicaid planning engagements, multiple family members may be actively engaged in the planning discussion. An adult child may schedule the meeting. A spouse may express concerns about financial security. A child acting as agent under a power of attorney may seek to communicate on behalf of a parent. Identifying who the client is provides the framework for the advisor's ultimate obligations.
Still, most (if not all) Medicaid planning strategies require substantive trade-offs between the client and other stakeholders who may be involved, that the advisor still needs to consider. A trust designed to preserve assets may require giving up control and access to assets. Gifting assets could potentially improve likelihood of eligibility for benefits but permanently transfers wealth to others. In other words, Medicaid planning is often less about finding the "best" strategy and more about determining which trade-offs a client is willing to accept.
Complicating matters more, the people participating in the conversation may not always have their objectives aligned to one another. The adult child who is initiating the discussion may have the priority of preserving their inheritance. The spouse may prioritize maintaining financial security. The individual potentially requiring care may have capacity issues and/or prioritize access to the highest possible quality care available. Despite these potential competing priorities and additional 'noise', it is critical that the advisor keep the focus on who their actual client is so that they do not sacrifice their obligation to the client to advance a non-client's goals.
That's why it can be the case that the most difficult Medicaid planning questions are often not technical, they are ethical.
Not because the strategies themselves are 'improper'. Most Medicaid planning techniques are legally valid and commonly used. Rather, the challenge is ensuring that recommendations reflect the client's goals and values rather than simply maximizing eligibility or preserving assets. And, for advisors, this distinction is very important.
The role of the advisor is not merely determining whether a Medicaid planning strategy can work. It's helping clients understand the trade-offs associated with available options and ensuring that the chosen path aligns with what matters most to them.
In many respects, this principle mirrors CFP Board's code of ethics, which requires CFP professionals to place client interests ahead of their own, properly manage conflicts of interest, and exercise objective professional judgment that is not subordinated to the advisor's interests.
Common Medicaid Planning Tools Are Designed To Reduce Countable Assets
When discussing Medicaid planning, advisors are often introduced to a variety of strategies designed to help individuals qualify for benefits, while preserving some portion of their assets. There are many techniques, but they all generally share the same objective of reducing the amount of resources that the state considers available to pay for nursing home care. Understanding how these tools work is important (as is understanding what clients may need to give up in exchange for the potential benefits).
Before discussing Medicaid planning strategies, it is helpful to understand why these strategies exist in the first place. Unlike Medicare, which generally does not provide coverage (or only provides limited coverage) for long-term care expenses, Medicaid is one of the primary payors of long-term care services in the United States. As a result, individuals who require extended nursing home care often find themselves evaluating whether they may eventually qualify for Medicaid assistance.
Eligibility, however, is generally subject to both medical and financial requirements. From a medical standpoint, Medicaid eligibility for long-term care generally requires more than simply reaching a certain age. Applicants typically must demonstrate that they require a nursing facility level of care, as determined under the state's functional and clinical eligibility criteria. While the specific standards vary by state, they generally evaluate an individual's need for ongoing assistance with activities of daily living.
From a financial perspective, while the specific rules vary by state, applicants are often required to meet resource limitations before benefits become available. When discussing resource limitations, this means that the client will be limited to a certain value of their "countable resources". Countable resources generally include assets such as cash, brokerage accounts, and certain other investments, while some other assets such as a primary residence under certain circumstances and personal belongings may be excluded. If an applicant's countable resources exceed the applicable limits, those assets generally must be spent down or otherwise addressed before Medicaid eligibility is available.
An institutionalized spouse often must reduce their own countable resources to approximately $2,000, while the community spouse may retain a federally protected Community Spouse Resource Allowance (CSRA), subject to state-specific annual minimums and maximums. Many states have a maximum limit of $162,660 in 2026, but limits can vary widely and be much lower. Although these spousal rules are intended to prevent the healthy spouse from becoming destitute, they frequently still require that a significant spend-down of assets occurs before Medicaid will begin paying for the applicant's nursing home care. Consequently, individuals with substantial assets may be expected to spend those resources on care themselves before qualifying for Medicaid assistance. This can create significant planning challenges.
The end result is that on one hand, long-term care costs can quickly consume assets accumulated over a lifetime of work and saving, and may have to consume assets before Medicaid eligibility. On the other hand, clients may wish to preserve some portion of those assets for a spouse, children, or other beneficiaries, shifting the assets to family members while accelerating eligibility for Medicaid. Yet the original purpose of Medicaid was to help support the costs of long-term care and other medical expenses for those who truly cannot afford them… not individuals who could, but would prefer to preserve assets for family rather than spend them on care. Which creates a whole additional layer of ethical issues to consider.
This important ethical dilemma can sometimes distinguish Medicaid planning from many other prominent areas of financial planning. Unlike planning strategies that seek to reduce taxes or grow wealth, Medicaid planning may involve helping a client qualify for a needs-based public benefit by reducing (or repositioning) assets that otherwise could have been used to pay for care. While these strategies are generally lawful and widely accepted, some reasonable professionals and clients may disagree about whether, or under what circumstances, they are "appropriate" and consistent with the broader purpose of the Medicaid program.
Nonetheless, it stands that a variety of planning strategies have emerged that seek to balance these competing objectives by reducing countable resources while maintaining some degree of economic benefit for the client or their family.
Medicaid Asset Protection Trusts
A widely discussed Medicaid planning technique is the use of an irrevocable Medicaid Asset Protection Trust ("MAPT").
A MAPT is typically designed to hold assets that a client wishes to protect from future long-term care expenses. Common assets transferred to the trust may include a primary residence, investment accounts, or other assets that the client hopes to preserve for future beneficiaries.
With a MAPT, the grantor cannot retain unrestricted access to the trust assets. If the client could access and use the principal from the trust, the state would generally continue to view the assets as available resources that could be spent on their care. As a result, Medicaid trusts typically require the grantor to relinquish significant rights to the property, such that the client really, truly, could not use the assets for their own needs in the future (including their future long-term care needs).
For example, while the trust may permit the grantor to receive income generated by trust assets, distributions of principal are typically prohibited. Additionally, an independent trustee is typically recommended (or required) to administer the trust and make decisions regarding trust property (so the client cannot be expected or compelled to distribute assets to themselves for their own care).
Also, the effectiveness of a strategy involving a MAPT depends heavily on timing. Transfers to a Medicaid trust are generally subject to the five-year "lookback" period. Meaning that if an uncompensated transfer occurs within five years of applying for Medicaid benefits, a penalty period may result. Therefore, Medicaid trusts are often most effective when implemented well before care is needed.
For clients who are relatively healthy and planning proactively, the potential benefits can be substantial. Assets transferred to the trust may eventually fall outside of the client's countable resource calculation, while still remaining available for future beneficiaries. As most often a client seeking Medicaid planning help is not a situation where estate taxes are a major concern, the trust can also be structured to preserve a step-up in basis at death.
As such, many clients find this strategy appealing on its face. The possibility of preserving assets while still obtaining long-term care benefits can be compelling. However, the trust only works because the client has given something substantial up.
A client who transfers real estate into a Medicaid trust may no longer have the ability to sell the property and freely spend the proceeds. A client who transfers a significant investment account may lose access to principal that could otherwise be spent for retirement expenses or for unexpected circumstances. Additionally, a Medicaid trust really gives weight to the word "trust" because whoever is named as trustee and/or beneficiary stands in the powerful position of deciding whether to take action to unwind the trust if the grantor ultimately needs the assets back.
Gifting Strategies For Medicaid Planning Purposes
Another common Medicaid planning technique involves making outright gifts to family members or other beneficiaries. Like a Medicaid trust, gifting generally seeks to reduce the applicant's countable resources. Rather than transferring assets to a trust, however, the assets are transferred directly to another individual. Interestingly, a MAPT can be seen as simulating a gift to a third-party, because the rules work the same. It is just that with a MAPT, the grantor has set specific rules for the use of the gift within the trust, while an outright gift to some other third-party like a family member means the family member controls what happens to the dollars thereafter.
Once assets are gifted and any applicable lookback periods have expired, those assets generally no longer belong to the Medicaid applicant. However, gifting introduces a different set of planning considerations. Unlike assets held in a carefully structured trust, gifted assets are owned outright by the recipient. When you gift assets to a person, you are subjecting those assets to whatever is going on with that person. For example, a child who receives a gift may later encounter creditor issues, divorce proceedings, substance abuse, or other unforeseen challenges.
Additionally, outright gifts typically eliminate the parent's ability to access or redirect the assets in the future. For some clients, this loss of control may not be a huge concern. For others, it may be a significant concern.
Consider a parent who gifts a substantial investment account to an adult child at age 75 in anticipation of potential long-term care needs. If care is not needed until age 90, the parent may spend 15 years without access to assets that were previously available to deal with the various needs, opportunities, and emergencies that life inevitably brings. The strategy may improve future Medicaid eligibility, but it does so at the sacrifice of permanently transferring ownership to someone else.
Nerd Note:
Traditional IRAs often present unique planning challenges in Medicaid planning because they generally cannot simply be gifted or transferred to a MAPT without triggering income tax consequences.
Unlike a brokerage account or a residence, transferring a traditional IRA to an irrevocable trust during life would necessitate a taxable distribution from the account. As a result, Medicaid planning involving retirement assets frequently requires a different analysis than planning involving non-retirement assets.
In some situations, clients may intentionally liquidate retirement accounts over time and transfer the after-tax proceeds into a Medicaid trust or make gifts to family members. However, doing so may accelerate income taxes and reduce the value ultimately available for planning purposes. Accordingly, clients with significant retirement assets often face an additional trade-off: preserving assets for future beneficiaries may require accepting income tax consequences that would not otherwise occur.
Medicaid-Compliant Annuities
Another strategy frequently encountered in Medicaid planning involves Medicaid-compliant annuities. Unlike trusts and gifting strategies, which seek to remove assets from the applicant's (or their spouse's) ownership, Medicaid-compliant annuities are often used in situations involving married couples.
Congress has long recognized that efforts to qualify one spouse for Medicaid should not necessarily leave the other spouse financially destitute. As a result, Medicaid contains a variety of spousal impoverishment protections designed to preserve resources for the spouse who remains in the community.
Medicaid-compliant annuities can sometimes help achieve this objective. These annuities would rarely (if ever) be seen as a prudent investment, but more so as a pure planning strategy. Basically, the "Medicaid annuity" converts otherwise countable resources into a stream of income that is payable to the non-institutionalized spouse. The payout term of the annuity is typically designed to be as short as possible (based on the availability of a carrier to offer the product). Depending on the circumstances, this may allow the institutionalized spouse to qualify for Medicaid benefits sooner, while preserving financial support for the spouse who remains at home.
The strategy can be particularly valuable when the necessity of care is imminent and proactive planning opportunities are limited. However, with these types of annuities, the asset is changed from an accessible asset, into a stream of income (where spousal income has different and more favorable protections than spousal assets when qualifying for Medicaid). However, converting an asset into income means access to principal may be limited and future flexibility may be reduced.
Accordingly, using a Medicaid annuity is a strategy that helps preserve certain objectives, while often requiring some sacrifice of other objectives. And understanding those trade-offs is essential before determining whether a particular strategy is truly aligned with the client's goals.
Understanding the common tools that are used, there are complexities in navigating who is interested in using these tools and what are their objectives.
Medicaid Planning Can Create Unique Ethical Challenges
While most financial planning involves a series of trade-off decisions (e.g., am I willing to spend a little less now, in order to save more for a better retirement in the future), Medicaid planning is unique in the extent to which there may be competing interests present in the planning process.
In part, this is driven by the sheer level of dollars at stake – where expenditures can be tens or more than a hundred thousand dollars every year – but it is also a result of how opposing interests can be, such as the individual who may even want to use their savings to improve the quality of their own care, versus a spouse who is worried about how they will provide for themselves after the individual is gone (if all the assets were spent down, leaving nothing for the survivor).
In such situations, where there are not necessarily any 'good' choices, only a series of difficult trade-offs to weigh with no single right answer, advisors must be especially cognizant of the ethical contours that may underlie both their recommendations and the decisions that the client must weigh.
Family Members May Have Different Objectives
When it comes to difficult trade-offs, one factor that distinguishes Medicaid planning from many other planning engagements is that the person initiating the conversation is often not the person who may ultimately receive care. For instance, the discussions may begin not with the individual who needs to go into a long-term care facility; perhaps a parent has experienced a health event or a cognitive decline which has raised concerns about future long-term care needs, and now their adult child is making decisions about their future care and how resources will be expended towards that care.
Whatever the catalyst, the child begins researching the available options on how to protect assets from nursing home costs.
A child driving the planning discussion, in and of itself, isn't necessarily problematic. Adult children often play an important role in helping aging parents navigate medical, financial, and legal decisions. Often, the child may have a better understanding of the parent's financial picture than the parent themselves. They may already be an agent under the parent's power of attorney.
However, their involvement can create unique planning challenges because the child initiating the discussion may not share the same objectives as the parent.
For example, consider a parent with substantial assets who could reasonably afford to pay privately for assisted living and/or nursing home care for many years. From purely an asset preservation/protection perspective, Medicaid planning could seem attractive. However, while Medicaid provides an important safety net and serves as a primary source of long-term care funding for millions of Americans, not every care provider accepts Medicaid patients. In some markets, clients who are able to pay privately may have access to a broader range of facilities, locations, and/or services than individuals relying primarily on Medicaid benefits. Likewise, some continuing care retirement communities and other private-pay arrangements may not be available to Medicaid beneficiaries.
This does not necessarily mean Medicaid-funded care is inherently inferior. Many excellent facilities accept Medicaid, and care quality can vary significantly regardless of the payment source. However, the fact remains that a client who aggressively pursues asset preservation strategies may ultimately be making a trade-off between preserving wealth and preserving future care options. Another client may decide that maintaining access to resources provides greater flexibility when making future care decisions, even if doing so results in fewer assets passing to beneficiaries.
Even aside from how Medicaid planning can impact access-to-care decisions, in some cases the tension between parent and child may be even more direct: an adult child may be especially focused on Medicaid planning to preserve assets that would otherwise be consumed by long-term care expenses, which will eventually come to them as a future inheritance.
Adult children who are expected beneficiaries are often motivated by entirely legitimate concerns. They may genuinely want to preserve family assets. They may be attempting to honor wishes previously expressed by a parent. They may be concerned about a surviving spouse's financial security. But, in the same vein, they may also have personal interests that are affected by the outcome.
This doesn't mean advisors need to automatically assume improper motives, but it does necessitate that the advisor acknowledge that multiple interests may be present simultaneously. As a result, advisors should take care to identify whose objectives are driving the planning discussion.
The first step is identifying who the advisor's client actually is. Under CFP Board's Code of Ethics and Standards of Conduct, the advisor's fiduciary duties run to the client, and that determination provides the framework for the advisor's recommendations. However, even after identifying the client, advisors should remain mindful that the objectives and preferences of spouses, children, and other family members may influence the planning discussion and should take care to ensure that the client's own goals remain at the center of the decision-making process.
The following questions could be helpful to uncover the proper path forward:
- What outcome does the actual client want?
- If another family member is participating in the discussion, are they acting in their own capacity or on the client's behalf (e.g., as agent under a power of attorney)?
- Has the client previously expressed preferences regarding long-term care or inheritance?
- If preserving assets requires sacrificing flexibility, would the client be comfortable making that trade-off?
- Is the planning recommendation designed primarily to benefit the client, or is it being influenced by the interests of a spouse, child, or future beneficiary?
In many cases, the answers may all align perfectly. In others, meaningful differences may reveal themselves. Accordingly, one of the most important responsibilities advisors have during Medicaid planning discussions is ensuring that the client's own objectives remain at the center of the decision-making process. Because before evaluating whether a strategy works, advisors must first determine whose goals the strategy is intended to serve.
Capacity Concerns In Weighing Planning Trade-Offs
One additional challenge advisors may encounter in Medicaid planning conversations is that the individual potentially requiring care may be experiencing (at least some degree of) cognitive decline. Unlike planning engagements involving healthy clear-minded clients, Medicaid planning discussions are frequently triggered by a health event that raises concerns about future long-term care needs. In some situations, the client's ability to fully understand, evaluate, and communicate planning preferences to weigh difficult trade-offs may be somewhat diminished.
This can introduce important practical and compliance considerations. Adult children or other family members may begin participating more actively in discussions on behalf of a cognitively impaired parent. Accordingly, advisors should first identify who their client actually is. Is the advisor engaged by the parent? By the child in the child's individual capacity? Or by the child acting as attorney-in-fact (i.e., agent) on behalf of the parent under a power of attorney? The answer helps define whose objectives should guide the advisor's recommendation. While the child's interest and involvement may be entirely logical and appropriate in each case, advisors should remain mindful that the priority is the need to understand the client's own preferences whenever possible.
For example, a child acting under a valid power of attorney may request information regarding Medicaid trusts, gifting strategies, or other asset preservation techniques. However, the advisor should still consider whether prior discussions, estate planning documents, or other evidence exists regarding the parent's wishes. Did the parent previously express a strong desire to preserve assets for the next generation? Did they previously say they wanted to prioritize flexibility and independence? Were there specific preferences regarding care options?
When capacity concerns are present and the child is acting on behalf of the parent (who is the actual client), determining the client's true objectives can become difficult. Recommendations that appear prudent from an asset-preservation perspective may not necessarily align with what the client would have wanted if they were fully present in the decision-making process.
Accordingly, advisors may benefit from focusing not only on what planning strategies remain available, but also on whether they have sufficient information to understand whose objectives those strategies are intended to serve.
Medicaid Planning Involves The Use Of Public Benefits
Another factor that can create ethical complexity in Medicaid planning is that the strategies are ultimately designed to help clients qualify for a public benefit program (i.e., a government-funded benefit for those in need).
Of course, the reality is that advisors often spend a significant portion of their time helping clients navigate tax laws and other areas where individuals seek to avoid the dissipation of assets for the government's benefit. Not many would argue that utilizing legally available deductions/credits, making annual exclusion gifts, and similar techniques that are authorized under the law is inherently unethical.
However, Medicaid planning is sometimes viewed differently. Unlike many planning strategies that seek to reduce taxes or improve financial outcomes, Medicaid planning frequently involves helping individuals qualify for what was designed as a "needs-based" government benefit for low-income individuals. In other words, Medicaid was primarily designed to support people who couldn't afford their own care… not those who chose to engage in asset transfer or other strategies just to impoverish themselves enough to be able to qualify. As a result, while some professionals view Medicaid planning as no different than any other form of planning that operates within existing legal rules, others question whether certain planning techniques are consistent with the broader purpose of the Medicaid program.
Reasonable people can disagree about where the line should be drawn. However, advisors should recognize that these differing perspectives often influence how Medicaid planning conversations are approached.
For example, some clients view Medicaid benefits as an important component of the long-term care system and see no ethical distinction between utilizing Medicaid planning techniques and doing tax planning. Others may feel uncomfortable with strategies designed primarily to gain access to public benefits for the needy. Then, there are others who have nuanced feelings that fall somewhere between these positions.
The challenge for advisors is not determining which perspective is correct. Rather, it is understanding that clients may approach Medicaid planning discussions with different assumptions regarding fairness, responsibility, and the role of public benefits.
A client who strongly values preserving assets for future generations may view a Medicaid trust as an attractive planning opportunity. Another client with identical financial circumstances may reject the same strategy because they are uncomfortable restricting access to assets in order to qualify for benefits later.
Accordingly, advisors should avoid assuming that maximizing eligibility is automatically the preferred outcome. Just because a strategy is legally available does not necessarily mean every client will view it as desirable. Instead, advisors should focus on helping clients understand the available options, the trade-offs associated with those options, and how those trade-offs align with the client's own objectives and beliefs.
When viewed through that lens, the advisor's role becomes less about determining whether a particular strategy should be implemented, and more about helping clients make informed decisions that are consistent with their values.
Advisor Conflicts When Providing Medicaid Guidance
Advisors are often trained to identify conflicts of interest when assessing/evaluating investment options, insurance products, or other financial planning recommendations. Similarly, conflicts can arise amongst the choices that advisors might recommend in Medicaid planning discussions as well. Recognizing the existence of the incentives for all parties to a planning discussion remains important, because they can shape the questions that are asked, the solutions that are considered, and ultimately the recommendations that are made.
For example, an attorney may be engaged specifically to implement a Medicaid trust. An insurance professional may be evaluating whether an asset-based Long-Term Care policy or a Medicaid annuity is warranted. A financial advisor may be considering strategies that preserve assets that would otherwise be spent on care.
From the financial advisor perspective, particularly when the dominant business model remains charging on assets under management, these disparate Medicaid planning options present their own conflicts as it pertains to advisors and how they are compensated. Those who can earn a commission from the implementation of an asset-based long-term care policy or a Medicaid annuity may find the path appealing – because their time and effort will be compensated – but an asset-based advisor may face the risk of having their managed assets disintermediated, and have an incentive to recommend gifting to a Medicaid trust (that the advisor can still be retained to manage) instead. More generally, advisors – similar to the conflicted adult child – have an incentive to see assets preserved (and still able to be managed), over being spent down on the quality of the parent's care.
Of course, the presence of a conflict of interest doesn't necessarily mean recommendations cannot be made, but the advisor must be cognizant of (and ideally disclose) the conflict of interest, and to the extent they can take steps to mitigate the conflict of interest as they are developing their recommendations to clients.
This distinction is very important because Medicaid planning discussions in particular often occur in difficult emotional circumstances. A recent diagnosis or hospitalization may create a sense of urgency making advisors feel pressure to identify urgent planning opportunities.
Under those seemingly urgent circumstances, it can become tempting to evaluate success primarily by whether assets are preserved or eligibility is achieved. But advisors who step back and determine the client's priorities, discuss the trade-offs, and understand family dynamics are often better positioned to provide guidance that reflects the client's values rather than jumping to a particular outcome.
Determining The 'Best' Medicaid Planning Strategy Depends On Client Priorities
One reason Medicaid planning can be particularly challenging is that there is really no objectively "correct" approach. This can feel uncomfortable for both clients and advisors. Many planning engagements involve identifying the most tax-efficient strategy. Medicaid planning is a different animal.
The difficulty is not simply determining whether a strategy works. The difficulty is determining which outcome the client values most.
For advisors, this reality highlights the importance of spending time identifying objectives before evaluating solutions. Discussions that begin with questions about trusts, gifting strategies, or eligibility rules can sometimes obscure the more fundamental issue of "what is the client ultimately trying to achieve?"
In many cases, clients themselves may not have fully considered these questions. They may know they want to avoid unnecessary long-term care expenses, but they may not have considered how they would balance asset preservation against flexibility. They may want to leave an inheritance, but not if doing so significantly limits their future choices. They may value independence, but also want to preserve resources for a surviving spouse.
The added complication is that a stroke, dementia diagnosis, hospitalization, or the like often becomes the catalyst for the first meaningful conversation about how future care will be funded. As a result, families may find themselves making important financial decisions under tremendous emotional pressure (and with a narrow range of planning options, as many of the planning opportunities that may have existed years earlier are no longer available).
When planning occurs during a crisis, the focus often shifts even further toward finding an immediate solution. Family members seeing the prospective bill for a long-term care facility for the first time may especially feel pressure to preserve assets before they are consumed by care costs. Advisors may be asked whether there are any remaining opportunities to qualify for benefits. The urgency of the situation can make it difficult to step back and evaluate whether the proposed strategy is truly aligned with the client's long-term goals and preferences.
In many respects, some of the most ethically difficult Medicaid planning situations arise not because the available strategies are inherently problematic, but because there is limited time to thoughtfully evaluate alternatives. When planning begins earlier, families generally have more flexibility. When planning begins during a crisis, difficult trade-offs often become unavoidable.
Either way, the goal for an advisor is not to determine which outcome they think the client should prefer. Rather, it is to help clients make informed decisions that reflect their own values, priorities, and preferences. Because, ultimately, a strategy can be technically or financially successful while still failing to accomplish what matters most to the client.
Given the competing interests often present in Medicaid planning discussions, advisors may benefit from documenting not only the strategy selected, but also the client's stated objectives and the trade-offs that were discussed.
Conclusion
Medicaid planning is often viewed from a technical lens of what tools and strategies exist. In many respects, however, the most difficult challenges are ethical rather than technical. Advisors must navigate competing objectives, family dynamics, capacity issues, public-benefit considerations, and significant trade-offs that rarely have a single correct answer.
This often requires discussions that extend beyond Medicaid itself. How important is leaving an inheritance? How important is maintaining flexibility? How concerned is the client about exhausting assets on long-term care expenses? Would the client prefer to preserve resources for beneficiaries even if it limits future options? Or would the client rather maintain access and accept that more of those assets may ultimately be spent?
Once those priorities become clear, the planning analysis often becomes significantly easier. The advisor is no longer attempting to identify the "best" objective strategy. Instead, the advisor is evaluating which available alternatives most closely align with the client's goals.
Accordingly, the advisor's role is not merely determining whether a strategy is legally permissible or technically effective. It is helping clients understand the consequences of available options and ensuring that planning recommendations reflect what matters most to the client. Because the ultimate goal should not be obtaining Medicaid eligibility. It should be helping clients make decisions that align with their care needs, financial goals, and personal values.
