Elder Law And Estate Planning Attorneys You Can Trust

Shivers Law Group

How can a Medicaid trust protect my assets?

On Behalf of | Apr 29, 2024 | Elder Law

As you approach your golden years, the thought of long-term care may cross your mind. While you have worked hard to accumulate assets, the cost of a nursing home or an assisted living facility could quickly deplete your savings. For this reason, some people create a Medicaid Asset Protection Trust.

This kind of trust is an irrevocable trust designed to protect your savings if you or your spouse require long-term care. By placing eligible assets into this trust, you can meet financial requirements for Medicaid coverage while safeguarding your wealth.

How a Medicaid trust functions

When you create a Medicaid trust, you transfer ownership of designated assets to the trust. These assets are no longer considered yours for Medicaid eligibility purposes. A trustee oversees the management of the trust while you or your beneficiaries can receive income or assets from the trust according to its terms.

One of the primary advantages of a Medicaid trust is avoiding the spend-down requirement for Medicaid eligibility. Without a trust, you might have to reduce your assets to qualify for Medicaid coverage, leaving little for your loved ones. Additionally, a Medicaid trust can protect your assets from Medicaid estate recovery efforts after you die.

Funding a Medicaid trust

You can transfer various kinds of assets into a Medicaid trust. Common examples include qualified retirement accounts, vehicles, personal valuables, certain life insurance policies, and even your primary residence under specific circumstances.

You might not have to reassign certain assets into your trust, though. Some assets may not affect your Medicaid eligibility if they fall below New York’s countable asset limits.

Understanding possible pitfalls

While a Medicaid trust offers significant benefits, there are a few considerations. The transfer of assets to the trust is irrevocable, meaning you cannot take them back once they are in the trust. Also, there is a five-year look-back period during which any asset transfers could still impact your Medicaid eligibility. Additionally, establishing and maintaining a Medicaid trust may involve costs that could be unnecessary if you have limited assets.

A Medicaid Asset Protection Trust can be a valuable tool for preserving your hard-earned assets while ensuring access to long-term care through Medicaid. Explore your options carefully to determine if a Medicaid trust aligns with your unique circumstances and goals.