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If you are planning ahead and a move to a nursing home is not imminent, a Medicaid Asset Protection Trust is the best way to plan ahead to avoid estate recovery. A revocable estate and longevity trust may also be used to protect against estate recovery for married couples, but not in every situation.
If your home is placed in a revocable trust, its not out of docHub for nursing homes because legally, you still own it. But if youve transferred your home into an irrevocable trust, its usually safe from being claimed because youve given up ownership; its no longer yours in the eyes of the law.
All states have a Medicaid Estate Recovery Program and must attempt reimbursement for long-term care costs. However, there are some circumstances in which a state cannot seek reimbursement.
Sometimes the State can recover from the probate estates of people who receive long-term care Medicaid benefits. The good news is that this program is absolutely avoidable in Texas. First, MERP can only recover from probate estates. To avoid this, simply sign a Lady Bird deed or Transfer on Death deed on the house.
Of course, as explained in the April issue of Texas Elder Law E-letter, the most common way that a homestead can be protected from the claim of the state is through the use of a Ladybird Deed (also known as an Enhanced Life Estate Deed) or a Transfer on Death Deed, since neither of these deeds results in a transfer
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Transfer to a Spouse: If you have a living spouse, transferring the home to them can protect it from Medicaid recovery, as the state doesnt recover from the estates of surviving spouses. Transfer to an Exempt Individual: Transferring your home to certain other individuals may exempt it from recovery.
Federal law requires each state to operate an estate recovery program that seeks repayment from the estates of deceased recipients of Medicaid long-term care benefits.
In Texas, the statute of limitations for Medicaid Estate Recovery Program (MERP) claims is generally four years. This means that the state has four years from the date of the Medicaid recipients death to file a claim against their estate for recovery of Medicaid benefits paid on their behalf.

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