Estate Recovery | How the State of Michigan Can Come After Your Assets After You Passed Away?

How the State of Michigan can come after your Assets after you passed away?
How Estate Recovery may affect your family?
How to avoid Estate Recovery?

Attorney and Advisor Chris Berry answer these questions in this episode of Daily Wisdom.

Estate Attorney and Advisor Chris Berry of Castle Wealth Group answers questions on retirement and estate planning every Wednesday at 1pm. Register via thisĀ linkĀ or give our office a call at 844-885-4200.

Castle Wealth Group and Christopher Berry help families with estate planning, elder law, retirement planning, and tax planning from their offices in Brighton, Ann Arbor, Livonia, Bloomfield Hills, and Novi.

Castle Wealth Group helps families with their legal, financial, and tax planning for their retirement and legacy.

With the use of legal structures like revocable living trusts, Castle Trusts (asset protection trusts), Chris Berry and Castle Wealth Group can help your family plan, protect, and preserve what is important through their Retirement and Legacy Blueprint Process.


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Episode Transcript

Estate Recovery

Hey, this is Chris Berry with Castle Wealth Group. Today we’re going to talk about estate recovery, how the state of Michigan can come after your assets after you pass away if you need long-term care. And if you like this information, please make sure to subscribe and comment on the video.

Christopher Berry is a leading estate attorney and advisor in the area of retirement and legacy planning. He has been featured in publications, such as Forbes, Kiplinger’s, Crain’s Detroit, and more. He’s the host of the weekly radio show and podcast, the Chris Berry show. He’s a national font leader as it relates to retirement and legacy planning and as author of the Amazon best selling-book, The Caregiver’s Legal Guide.

So we’re going to talk about estate recovery. So we need to talk about how estate recovery may affect your family. So let’s say you have a loved one that needs long-term care. They need home care or assisted living and then maybe they transition into a nursing home which costs anywhere from 10 to $14,000 a month these days. And the question is, how do you go about paying for nursing home care? That’s where we have a governmental program called Medicaid, not Medicare, Medicaid, that will help pay for nursing home care.

To qualify for Medicaid there’s an asset test where a married couple, they’re going to make you cut your assets in half. At most, you can have $120,000 of accountable assets. And a single individual, at most, can only have $2,000 worth of accountable assets. Accountable assets are everything other than a home, small cash value of life insurance, personal belongings, prepaid funeral, and an automobile. Everything else is accountable asset.



So Medicaid wants you to spend down those assets until you’re below $2,000 worth of accountable assets. And as a certified elder law attorney, we have certain strategies to help protect those assets. Where if we plan early enough ahead, we can protect a hundred percent of your assets from that nursing home or Medicaid spend out. Or, if you have a loved one nursing home right now, there’re things we can do at the last minute to protect maybe at least 40 to 50% of your assets.

So one of those things I said was an exempt asset is your home, but here’s the thing. You need to protect your home from Estate Recovery because while your home is exempt, while you’re alive, the state of Michigan and Medicaid can place a lien on the home after you pass away. And this is called Estate Recovery.

So if the state of Michigan paid out $50,000 worth of benefits, they can slap a $50,000 lien on your home or any of your other assets. That’s what’s called Estate Recovery. The state can recover against your estate for whatever they paid out in benefits.


Planning Ahead

So how do we avoid Estate Recovery in Michigan? Well, we need to ensure that none of your assets end up going into probate, because in Michigan, they can only place a lien on any assets that end up going into probate. And so for a lot of times, if we’re on Medicaid, what might end up going into probate is your home. So how do we avoid that? Well, if we plan ahead, we can set up an Asset Protection Trust, a Castle Trust, move the assets into the trust. And then if we make it five years before we need a nursing home, then everything inside of that trust is protected from that nursing home Medicaid spend-down, plus it is protected from that estate recovery.

So that’s the ideal way to avoid estate recovery is set up a Castle Trust and make it five years. Now we might not have that much time. So instead for the home, what we might do to avoid that Medicaid estate recovery is we might do what’s called a Ladybird Deed. A Ladybird Deed is a type of deed that says the home is in your name while you’re alive and then upon death that avoids probate and avoids that estate recovery.

So if you’re looking at avoiding probate and avoiding estate recovery for your home, then it’s important to set up that deed properly. If we’re planning ahead, we’re going to deed that property into the Castle Trust. If we’re in a crisis mode, we don’t have five years, then we’re going to set up a Ladybird Deed to say the home is in your name or your loved one’s name while they’re alive. And then upon death, it avoids probate and avoids that estate recovery.

So hopefully that’s helpful. This has been Chris Berry with Castle Wealth Group. Make sure to subscribe to the video and leave us a comment down below. Thank you so much

Castle Wealth Group has clients across the nation and helps families plan, protect and preserve what is important by creating a retirement and legacy blueprint.



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