This Medicaid Mistake may seem obvious, but it is a common one. Don’t give your children your assets until you consider the consequences.

We all work hard to give our children everything we can, and many of us derive great joy in helping our children in any way we can. But when it comes time to Medicaid, poorly planned gifts to your children (or anyone for that matter) can create a loss of Medicaid to pay for nursing home care.

Sometimes people think it’s simple: “I’ll just give everything I own to my kids. It’ll make their lives easier, make me happy, and then I’ll be eligible for Medicaid.” Unfortunately, it doesn’t really work that way, and can be a terrible strategy, both for you and your children.

For starters, if you give all your assets away to your children on Tuesday and then apply for Medicaid nursing home care on Wednesday, claiming you are broke, then you will be ineligible for coverage unless you meet one of the exceptions. This means that Medicaid will not pay for nursing home care for a certain number of months.

As part of determing the Medicaid transfer penalty, Medicaid will “look back” 60 months to see what gifts you made (and other actions) and will assess a penalty based on what they find from the date you enter a nursing home, file for Medicaid and are otherwise eligible. So, right off the bat, giving away assets without a strategy can create problems.

Well. I trust my kids and they will give me the money back if I need it. Unfortunately, the money might not be there for a number of reasons. Also, your money is at risk if your child has creditor or marital problems.

There are other considerations as well, such as your future financial security and tax consequences. The bottom line is that you should not give away your assets too early.

Some things you can always give your kids without thinking twice, like advice, moral support, or even hugs. But when it comes time to Medicaid planning, don’t make the mistake of giving your kids, or anyone, your assets without fully understanding the consequences.