Florida residents who are aging or planning for long-term care face unique challenges when it comes to preserving their assets while qualifying for public benefits such as Veterans Affairs (VA) Aid and Attendance and Medicaid Long-Term Care. Effective estate planning and asset protection strategies are essential to balance eligibility requirements with the goal of passing on wealth to heirs.
Both Medicaid and VA Aid and Attendance programs provide crucial financial assistance for long-term care. However, they come with strict asset and income limitations:
- Florida Medicaid Long-Term Care requires applicants to have no more than $2,000 in countable assets (as of 2025), although some assets—like a homestead, a vehicle, and personal belongings—are exempt.
- VA Aid and Attendance, a benefit available to wartime veterans and their surviving spouses, has a net worth cap of $155,356 (as of 2024), which includes income and most assets. Certain medical expenses can be deducted to help reduce countable income.
Without proper planning, individual’s risk having to “spend down” their assets to qualify, potentially losing the ability to leave an inheritance.
Asset Protection Strategies in Florida
Florida law offers several tools and advantages for asset protection, especially in the context of Medicaid and VA planning:
- Homestead Exemption: Florida’s primary residence exemption protects the value of a home (up to certain limits) from both creditors and Medicaid estate recovery. For Medicaid purposes, a home with equity under $713,000 (2024 limit) is considered exempt if the applicant or spouse lives in it.
- Irrevocable Trusts: Assets placed in a properly structured irrevocable Medicaid asset protection trust (MAPT) are removed from the individual’s estate for eligibility purposes, provided they are transferred at least five years before applying for Medicaid. For VA benefits, the look-back period is only three years.
- Income Trusts (Miller Trusts): If a Florida Medicaid applicant’s income exceeds the eligibility cap (currently $2,829/month in 2024), a qualified income trust (also called a Miller Trust) can be used to divert the excess income and qualify.
- Gifting Strategies: While direct gifting can disqualify someone from benefits due to penalty periods, strategic gifting with proper legal guidance can help reduce countable assets over time. Timing and documentation are critical due to the look-back periods (5 years for Medicaid, 3 years for VA).
- Personal Service Contracts and Caregiver Agreements: These contracts allow seniors to pay family members for caregiving services in a lump sum, effectively converting countable assets into exempt income. This must be done under legal supervision to ensure compliance with Medicaid rules.
A comprehensive estate plan in Florida should align with both asset protection and long-term care objectives. Key documents include:
- A revocable living trust to avoid probate (though not useful for Medicaid protection).
- A durable power of attorney with broad gifting powers to enable proactive asset repositioning.
- A living will and healthcare surrogate designation to manage medical decisions.
- A last will and testament for any non-trust assets.
For Florida residents, navigating the intersection of estate planning, VA benefits, and Medicaid eligibility requires careful coordination and legal expertise. With proper planning—including the use of trusts, income management tools, and Florida’s strong homestead laws—seniors can protect their assets, maintain eligibility for essential benefits, and preserve their legacy for future generations.