Liquidating assets before

If you create a life estate and transfer real estate, you’ll incur no penalty if you enter a nursing home, provided the transfer occurred at least five years before your illness.

If you enter a nursing home within that five-year window, however, you may incur a financial penalty for transferring property that would otherwise have been available for estate recovery. Some states, such as Colorado, do not count periodic payouts from annuities when determining Medicaid eligibility.

Upon the filing of a Chapter 7 bankruptcy petition, all of your assets are automatically placed under the custody of a court-appointed trustee and placed into a legal entity called a bankruptcy estate.

Because of this legal process, all property that you owned at the time you filed for bankruptcy may no longer be your property to sell, depending on whether it is exempt from liquidation by the trustee.

If your state does consider annuity payouts when determining Medicaid eligibility, you can still safely transfer assets into an annuity, but you cannot use Medicaid's services for a specific period of time following the transfer.Of course, there’s no way to know with certainty if or when you will need nursing home care, but giving gifts to your family members well ahead of time helps protect the money from creditors seeking to collect after your death.In the case of Medicaid, any assets you transfer within the five years prior to entering a care facility are subject to seizure after your death.Nursing homes provide a valuable service for elderly and disabled individuals who cannot adequately care for themselves. The American Association of Retired Persons reports that the typical nursing home stay costs an average of ,000 a year.Many elderly individuals mistakenly believe that Medicare will cover their nursing home stay.

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As a life tenant, you retain the right to continue living in your home until your death.

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