Although the primary reason for creating an estate plan is typically to provide a roadmap for the distribution of estate assets after death, most people also choose to include additional components into their estate plan because of the numerous goals that can be accomplished with a comprehensive estate plan. One common — and wise – addition to an estate plan is Medicaid planning. A properly drafted Medicaid plan allows you to protect your heard-earned assets while still ensuring that you will qualify for Medicaid should you need the benefits provided by the program in the future. If you do include Medicaid planning in your overall estate plan you will likely create a Medicaid trust. What happens to the assets in your Medicaid trust if you die without ever needing Medicaid?
Medicaid planning is an important addition to your estate planning because there is a strong likelihood that you will need to qualify for Medicaid during your “golden years” and qualifying for Medicaid could put your assets at risk if you failed to plan ahead by including Medicaid planning in your overall estate plan. You may need Medicaid to help cover the high cost of long-term care, costs that will not be covered by Medicare nor by most private health insurance plans. Medicaid, however, is intended to help low income individuals and families. For this reason, an applicant’s income and countable resources cannot exceed the program limits, limits that are extremely low. If the value of your countable resources does exceed the program limits you will be required to “spend-down” your assets until you qualify for benefits, a process that can quickly deplete a lifetime of working hard and saving for the future.
To prevent this unwanted outcome, Medicaid planning often includes the creation of a Medicaid trust. A Medicaid trust is an irrevocable living trust that is designed to take ownership of assets that would prevent you from qualifying for Medicaid benefits. When properly drafted, the assets transferred into the trust will no longer be considered when determining eligibility for Medicaid. If you never need Medicaid, however, you cannot “take back” those assets because the trust is an irrevocable trust. Once assets are transferred into a Medicaid trust they become trust property and the terms of the trust will dictate what happens to them without regard to whether you ever need Medicaid or not.
To ensure that your Medicaid trust is properly drafted and that the terms of the trust continue to protect your assets in the future it is important to work with an experienced New York Medicaid planning attorney. Contact the experienced New York estate planning attorneys at the Law Offices of Kobrick & Moccia, by calling 800-295-1917 to schedule your appointment.