To qualify for Medicaid coverage of long-term care in New York, you cannot have more than $15,450 in assets. But with nursing home costs as high as $6,000 to $7,000 a month, you may need Medicaid benefits to afford your care.

If you want to qualify for Medicaid without first going broke, you can create an irrevocable trust. You put your assets in the trust, shielding them from the limits on government benefits. By doing this, you become eligible for Medicaid while keeping your assets safe.

New York will not consider you the owner of assets in an irrevocable trust

The trust you set up to qualify for Medicaid is irrevocable, meaning that once you create it, you cannot take your assets back out. Instead, you choose a trustee to manage it. This person is someone you can count on to take care of your assets, like your child or a friend. You write down rules for how the trustee manages the trust and who receives your assets when you pass away.

Since you don’t manage the trust and transfer ownership of your assets to the trust, you can qualify for Medicaid. The trust holds your assets while you collect benefits for expensive long-term care.

Avoiding the look-back period

However, to effectively use a trust to qualify for Medicaid, you must set it up at least five years before you seek benefits. The New York Medicaid office will look back to see how much money you had in the five years before applying and how you got rid of it. If you gifted assets to your family or an irrevocable trust within this time limit, you can face penalties.

But if you start early with your estate planning, you can ensure that you have the trust in place in time to qualify you for Medicaid.

Saving your inheritance for your family

There is a good chance you will need some form of long-term care in the future. Whether you have nursing care in your own home or a nursing home, you can easily spend all your assets, leaving nothing for your heirs. An irrevocable Medicaid trust helps you keep your inheritance intact.