Episode summary
Medicaid Planning For Long-Term Care And Its Ethical Implications For Advisors, With David Haughton
Financial Advisor Success (Kitces)
· · 30 min · Hosts: Michael Kitces · Guests: David Haughton
Summary
Medicaid planning for long-term care is less about maximizing benefits than about matching the plan to a client’s goals, family situation, and willingness to trade control for eligibility. David Haughton explains that many people who have meaningful assets still use Medicaid planning because nursing home costs can quickly consume savings, and the right strategy depends heavily on state rules and the client’s priorities.
He walks through three common approaches: outright gifting, irrevocable Medicaid trusts, and Medicaid annuities. Each can help move assets out of the Medicaid eligibility calculation, but each also comes with trade-offs such as loss of control, five-year look-back exposure, basis issues for heirs, or the need for a spouse to be involved. He also notes that some assets may be better spent down than preserved, especially when tax consequences or the client’s care preferences matter.
A major theme is ethics and process. Haughton says advisors must first determine who the client actually is when adult children or powers of attorney are involved, then document wishes clearly and plan proactively whenever possible. His core point is that advisors should not force a wealth-preservation answer; they should lay out the options and let the client decide what best reflects their priorities.
Key takeaways
- David Haughton says Medicaid planning should be guided by the client’s goals, not by a reflex to preserve every possible dollar.
- He highlights a five-year look-back for proactive gifting and trust-based planning, making early action critical.
- Haughton says Medicaid annuities can convert countable assets into income for a non-institutionalized spouse in crisis planning.
- He warns advisors to identify who the actual client is when adult children or powers of attorney are involved.
- Haughton recommends documenting client wishes separately from boilerplate legal forms so fiduciaries can follow them later.
Notable quotes
“Medicaid planning is not simply about preserving the most assets or qualifying for the most benefits”
“It's really about the client's goals and priorities”
“you need to know is it asset preservation is the parent's goal or is asset preservation the child's goal”
“what are the legal methods and the appropriate planning techniques they can take to accomplish those priorities”
“there are moral issues, there are ethical issues, and there are concerns that both the advisor and the client may have”
How the episode opens
Medicaid planning is not simply about preserving the most assets or qualifying for the most benefits. It's really about the client's goals and priorities.
Hello and welcome back to the Financial Advisor Technician podcast. I'm your host Adam Bendousen. On today's episode, we're going to discuss Medicaid planning in the context of long-term care, a topic that often comes up for financial advisors working with older clients who might be preparing for need for long-term care, but can also arise when working with younger clients who are supporting an aging parent through the long-term care process.
While there are several planning strategies that can help individuals requiring long-term care to avoid drawing down their assets in order to qualify for Medicaid, these strategies come with trade-offs that might be acceptable to some clients while perhaps not being a preferred option for others. In addition, an advisor might find themselves in the situation of dealing with competing interests among family members, such as an older client who might want to preserve flexibility in their long-term care options, or adult children who might prioritize preserving assets. To help us dig deeper into this topic, I'm joined today by David Hutton, the vice president of estate planning at Carson Group, to discuss the different types of Medicaid planning strategies and their trade-offs, ethical considerations for financial advisors when working with clients on this topic, and how advisors can take action with their clients today to create the best possible outcomes down the line.
So, welcome David and thanks for joining the Financial Advisor Technician podcast.
Thank you so much for having me. I'm so excited to to talk about this important topic. — Terrific. So, to start, perhaps you could provide a quick introduction on what Medicaid planning is in the long-term care context and the different types of clients for whom it might be applicable.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- medicaid planning
- long-term care
- estate planning
- ethics for advisors
- powers of attorney
Companies and tickers mentioned
- Carson Group
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Financial Advisor Success (Kitces), this episode and its artwork belong to Michael Kitces. Octagon is not affiliated with the show; this page is an independent summary.
