Could a trust help with Medicaid planning?

Published By | Aug 2, 2022 | Long-Term Care Planning |

There is no doubt that nursing home care is expensive. Going into a nursing home costs thousands of dollars a month and tens of thousands annually, at a minimum. It makes sense that you’d want to qualify for Medicaid, because doing so could help prevent you from spending down your own assets.

A trust is a tool that you can use to make qualifying for Medicaid while protecting your assets simpler. Not all trusts are made the same, though, so it is essential that you look into the types that offer the most protection.

Using a trust for Medicaid planning

Medicaid has low asset and income limits, which makes it harder for some people to qualify for it. However, if you use a trust, you may be able to qualify while still retaining many of your assets.

When you use a trust, assets are taken out of your name and placed into the hands of a trustee. They hold the titles to the assets, and then they will pass on those assets in accordance with your wishes.

Revocable trusts can be changed by the person who set them up, but irrevocable trusts cannot. To make it so your assets aren’t countable, you’ll want to use an irrevocable trust. Medicaid considers revocable trust assets as part of your estate, because you could choose to dissolve the trust and take back those assets at any time.

Irrevocable trusts have several benefits

You should keep in mind that irrevocable trusts have several benefits including protections against taxation and creditors, the ability to lower the value of your estate and the benefit of passing on your assets at the time you wish to do so. They protect your assets, and the assets within them are not counted as you work towards qualifying for Medicaid.

There is a look-back period, but if you start planning now and enough time has elapsed, it won’t matter how much you put into the trust. All that will matter is what counts as income or liquid assets. If you can get that value down, then you can more easily qualify for Medicaid.