What If I Already Gave Away My Assets? Medicaid Mistakes You Can Still Recover From

What If I Already Gave Away My Assets? Medicaid Mistakes You Can Still Recover From

When families reach out to us after transferring assets—whether it’s a home, a large sum of money, or investment accounts—they usually ask the same thing:

“Can we fix this?”

They meant well. Maybe they were trying to help a child buy a house or keep a property in the family. Maybe someone said it would help them “spend down” for Medicaid. Either way, the damage feels done—and now they’re worried about how to cover care costs without going broke.

Here’s the good news: you’re not out of options.

Why This Becomes a Problem

Medicaid has strict rules around gifting. If you give away assets within five years of applying for long-term care benefits, those transfers can trigger a penalty period—a stretch of time when you’re ineligible for coverage, even if you meet the medical requirements.

This isn’t just an issue for large estates. We’ve seen situations where a parent transferred a $40,000 account to a child or added a child’s name to the deed “just in case.” Moves like these can delay Medicaid approval and leave families scrambling to cover nursing home costs, which often exceed $10,000 per month.

Can You Undo a Gift?

In some cases, yes. And when you can’t completely undo it, you may still be able to mitigate the damage.

Here are a few of the strategies we use:

• Partial or Full Return of Gifted Assets: If the person who received the asset is willing and able to return it, Medicaid may reduce or eliminate the penalty.
• Caregiver Agreements: If a child provided care or housing in exchange for that money or asset, we may be able to structure a formal agreement to account for that value.
• Promissory Notes or Loans: Structured properly, a loan to the applicant can help preserve funds while staying compliant with Medicaid rules.
• Crisis Planning with Medicaid-Compliant Tools: There are legal planning tools designed specifically for late-stage asset protection. But timing is key.

Don’t Try to DIY the Fix

We often see families try to fix this on their own—calling the Medicaid office, searching online for strategies, or shifting money around again. Unfortunately, those efforts often make the situation worse.

Medicaid planningis full of technical rules and hidden pitfalls. Even well-intentioned moves can disqualify someone from benefits or trigger additional penalties. A single misstep now could cost you tens of thousands of dollars.

We Help Families Course-Correct

At Rutkowski Law Firm, we’ve helped many families in this exact position. Whether a gift was made two months or two years ago, we can review your situation and help you understand your next steps. You’re not the first to face this. You won’t be the last. But you can be one of the families that avoids unnecessary stress, cost, and court battles.