Medicaid planning is important if you want to protect your assets. In the event that you need to move into a nursing home or to seek long-term medical care that relies on Medicaid for coverage, you’ll want to make sure you’ve taken the appropriate steps to protect your assets. If you haven’t prepared in advance, you could have to spend down your assets, leaving you with less in your overall estate.
Medicaid planning can be done in a way that protects your assets from Medicaid spend down. An irrevocable Medicaid trust is one option that you can look into.
What is an irrevocable Medicaid trust?
An irrevocable Medicaid trust, or simply an irrevocable trust, is one that takes assets of your name and holds them in a third party’s name. The third party’s job is to protect the assets and to pass them on to your heirs or beneficiaries when the time comes.
With Medicaid planning, the goal is to eliminate your countable assets, which are things like your income or property, so that you aren’t forced to sell these assets or use them to pay for your long-term medical care.
It is important to use an irrevocable trust rather than a revocable trust, because a revocable trust is still seen as a countable asset by Medicaid. On the other hand, you can’t change an irrevocable trust. The assets are out of your hands, and name, so they technically no longer belong to you. Medicaid does not count those assets.
Medicaid does have a look-back period to consider. If you give large gifts suddenly or transfer many of your assets to others within a short time before applying for Medicaid, then you may find that you can’t qualify for Medicaid as soon as you’d like. If you were to need urgent care in a nursing home, then you would not want any assets to fall into that look-back period.
To avoid that, start planning now. Your attorney can help you set up your irrevocable trust, so your assets will be protected in the future and you won’t have to worry about the look-back period.