Article: Deficit reduction act 2005-changes to the federal assistance statute,transfer of asset rules.

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Puthan(VJ) Vijayan is the Principal member of PMV Investment Advisors,LLC.The firm is a Registered Investment Advisor.VJ is a Certified Estate Planner and Registered Financial Consultant, with over 15 years of planning and investment experience.

Federal Rule Change 1)Five year look back on all transfers.No longer a distinction between transfers involving trusts and those not involving trusts. 2)Penalty period start date-The later of the date the transfer was made or the date the individual 1)would be eligible for medical assistance;2)would otherwise be receiving institutional level care. Basically, penalty period will not begin until the client is admitted to a nursing home and out of funds. 3)States may treat multiple fractional asset transfers within the look-back period as a single transfer with penalty period on the earliest date that would apply. 3)Limits home equity exemption to $500,000,though states have an option to increase it to $750,000. 4)Continue to permit the use of annuities as a medicaid planning technique but 1)medicaid recepients and community spouses are required to diclose annuities at the time of eligibility determination and at recertification;2)the purchase of an annuity will be treated as a divestment unless the state is named as beneficiary;3) state medicaid programs must notify the issuer of the annuity of the state's status as remainder beneficiary. The above are the main charecteristics of the act, but the big question is under which law are we now operating?

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