Litigation Tips
In this climate of ever more stringent Medicaid eligibility rules, it is critical for facilities to understand the asset protection/Medicaid planning techniques employed by your residents and prospective residents. A common technique post-DRA is the note and loan plan whereby the resident gifts a portion of their assets to an individual and loans the other portion. A promissory note must be executed in connection with the loan, which note must comply with federal and state laws. For example, repayments must be in equal amounts, must be actuarially sound, the note must be non-cancelable and include a fair and reasonable interest rate.
If you are uncertain whether a resident or potential resident's asset protection plan will pass muster under the DRA, reach out to your elder law attorneys and have them review the documents and calculations. A little up-front investment can save you thousands in the long run.