Why Medicaid Trust Is Considered As A Valuable Tool to Protect Assets?

Why Medicaid Trust Is Considered As A Valuable Tool to Protect Assets?

Have you spent your lifetime in accumulating assets? So, why not invest these wisely and hence leave behind a substantial estate for your loved one when you pass away. Nobody wants to lose their assets at the last minute due to the need to pay for the long-term care. This is something that might happen, if you fail to plan in advance. For this, you must do Medicaid Planning. Proper Medicaid Planning done in advance with the help of an attorney will help you in getting qualified for the Medicaid. It involves transferring assets in advance to a trust so that your income remains protected. Hence, including Medicaid Planning Trust in your estate plan is very important.

Medicaid Trust

It is a type of trust that is intended to preserve the assets of a trustor with the expectation of possible long-term care incapacity. It is sometimes referred as Medicare Trust i.e. an irrevocable trust. Assets of the future nursing home patient remain in safer hands with this.  In order to assure that Medicaid won’t deny any of the assets that are included in the trust, you must set it up and transfer assets into the trust. This must be done for a minimum period of five years if you want to apply for long-term care or enter a nursing home. This process is known as five year lookback period.

The Working of Medicaid Trust

The assets are placed into an irrevocable Medicaid Trust. The futuristic Medicaid beneficiary can make use of the assets as before. Since, assets are held by the trust rather than the beneficiary; the government doesn’t consider these assets for the qualification purposes. The elderly person that is alive can make use of the furniture and drive the car as held by the trust, but he or she is not eligible for getting qualified for the program. This is so because the assets are not in the name of the elderly person. Additionally, there are certain provisions in the trust so that their children and grandchildren can receive the assets when they pass away.

Protect Assets from the Nursing Home Costs

There are techniques to minimize the cost of long-term care insurance and protect a greater amount of your assets for the nursing home costs, for instance, purchasing a plan with a restricted coverage.  In such a case, pay for what the plan doesn’t cover from your savings. Also, you can limit the number of years the benefits are paid or even you can opt for reduced daily benefits. If you can bear to do so in advance of requiring the long-term care, then purchasing a long-term insurance is a wise and sensible option.  This is a costly method and that is why you avoid getting a long-term insurance policy. Hence, you may end up requiring a long-term care that is good for you. For this, life insurance policies are available that comprise of long-term care benefits. In case you pass away without making use of long-term care advantages, your beneficiaries will receive the death advantage. This is same as with a life insurance policy. If you want to avail the advantages of long-term care, you can use death benefits. This might pay for whatever the long-term care that you require. In the event if anything is left after you pass away, that goes to your beneficiaries too.

Medicaid Five Year Lookback Period

Medicaid has a five year lookback period. This timeframe is for the assets that you sell or transfer to a trust. Transfer of specific assets is rejected if they are made for less than five years prior you enter a nursing home. In case they are rejected, this implies that you still possess them. Hence, you need to spend them down prior getting qualified for a Medicaid long-term care help.

Irrevocable Medicaid Trust

You might have specific assets that you want to leave after your death for your spouse or children when you pass away. One of the ideal options to avoid spending down assets in order to qualify for Medicaid is making an irrevocable Medicaid trust. The assets which are used for funding this type of trust are not considered for getting eligible for Medicaid. This is so because neither you nor your spouse has direct access to the principal or is called as a trustee. Properly set up an irrevocable Medicaid trust and protect your assets from a Medicaid spend down. At the same time, it enables you for getting qualified for the long-term care. It also implies that your assets get pass down to your spouse and children when you pass away. This is so as mentioned in the terms of trust. Remember, establishing a trust at such an early stage and then transfer your assets for a minimum period of five years will help you in receiving long-term Medicaid care advantages. In case you don’t meet this minimum five year period plan, Medicaid might judge your transfer and the trust itself as void, thus will consider your assets in determining your eligibility for the long-term care.

Final Words

Medicaid trusts are the ideal option for the people who want to protect their assets and want to get qualified for the Medicaid in the long-run. These tools hold the assets in a trust so that they are considered as a part of person Medicaid application. This trust is irrevocable as it is made for taking the possession of the assets, which are considered as countable resources when you apply for the Medicaid. As it is irrevocable, the time your transfer an asset to a trust will not be a part of your estate and hence, no longer a countable resource. If created at an early stage and properly drafted, a Medicaid trust can protect a considerable amount of assets. The assets held in the trust will get distributed to your loved ones when you die. By making a Medicaid Planning Trust you can protect your assets rather than using them to cover long-term care expenses for you or your spouse.


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