3 benefits of an irrevocable Medicaid trust

by | May 1, 2020 | Long-Term Care Planning |

After years of building up your assets to take care of your family, you may feel proud that you can bequeath a substantial inheritance. But as you get along in years, you may eventually need care in your home or a nursing facility. With costs for care as high as $150,000 per year, you may want to prepare for this expense to save your legacy.

To prevent losing your estate to a long-term care provider, you can rely on Medicaid to pay your bills. But to do so, you will need to meet the strict income and asset restrictions. One strategy that can help you protect your assets is an irrevocable Medicaid trust. Here are three benefits to using a trust:

Avoid paying out of pocket

One of the most important benefits of a Medicaid trust is to avoid using personal assets for long-term care. Costs can rise as high as $150,000 per year, quickly draining an estate. And strict limits in New York only allow Medicaid for those with few assets.

Instead of paying down till you reach the asset limit, you can put your possessions into a trust. The state will not consider what is in the trust to belong to you. You can qualify for Medicaid without losing all your belongings.

Have access to your assets

When you require long-term care, you don’t necessarily need to go into a nursing home. Having access to your home lets you stay where you’re comfortable. Since the trust takes over as the official owner, Medicaid won’t consider your assets as your property.

Protect your legacy

If you pay out of pocket for long-term care, you will spend down your savings and may even need to liquidate the property you have built up for your family. With a trust, your assets stay protected from these expenses. You can name your family as beneficiaries who will receive distributions after you pass away.

Medicaid will also not be able to recoup costs from your trust. Your inheritance stays safe, keeping your assets in the family.

The benefits of starting early

While an irrevocable Medicaid trust has advantages, early planning can ensure you use it to its greatest benefit. To qualify for benefits, Medicaid in New York has a five-year look-back period. When you apply, your assets must be in the trust before that time, or else you will need to wait for five years after the transfer.

After a lifetime building a legacy, a trust can help you pass it along to your children and heirs. You won’t have to sacrifice your inheritance to receive the care you need.