If you are wise, you will likely include Medicaid planning within your overall estate plan early on in life. Medicaid planning ensure that your assets are protected later in life and that you will qualify for Medicaid benefits should you need them during your golden years. Although every Medicaid plan is unique, many include the creation of a Medicaid trust. If you are contemplating the inclusion of a Medicaid trust in your estate plan it helps to understand both the advantages and disadvantages to a Medicaid trust.
You may easily go through your entire working years without ever giving the need to qualify for Medicaid benefits a second thought. During your “golden years”, however, there is a very good chance you will need those benefits to help cover the high cost of long-term care for you and/or a spouse. Because eligibility for Medicaid depends, in part, on your income and assets, failing to plan ahead could put your assets at risk as well as result in disqualification for much needed benefits. When you apply for Medicaid, your current income as well as the value of your countable resources will be considered. If either your income or the value of your resources exceeds the program limits you will be denied benefits or you will need to “spend down” your assets before Medicaid will start covering your care. Medicaid planning aims to avoid such a result by protecting those assets before you ever need Medicaid.
One common tool used to protect assets is a Medicaid trust. A Medicaid trust is an irrevocable trust that is created into which non-exempt assets are transferred in anticipation of needing to qualify for Medicaid at some point in the future. The obvious advantage to a Medicaid trust is that when prepared far enough ahead of time, and properly drafted, the trust should protected assets that could otherwise be lost to the Medicaid “spend-down requirements.
The biggest disadvantage to a Medicaid trust, for most people, is the fact that the trust is irrevocable, meaning that no changes can be made once the trust becomes effective. It also means that the assets transferred into the trust permanently become the property of the trust. Therefore, even if you never actually need Medicaid you cannot simply “take back” assets transferred into the trust. Instead, the trust terms will dictate what happens to those assets once they become trust property. Of course, as the creator of the trust you will decide the terms of the trust.
If you have additional questions or concerns about Medicaid planning or estate planning in general, contact the experienced New York estate planning attorneys at The Law Offices of Saul Kobrick, P.C. by calling 800-295-1917 to schedule your appointment.
Latest posts by Saul Kobrick (see all)
- Hauppauge Elder Law Lawyers Warn about Financial Exploitation - May 22, 2018
- What Is Involved in Trust Administration? - May 15, 2018
- May is Older Americans Month — The Perfect Time to Review Your Estate Plan - May 4, 2018