Using Irrevocable Trusts as Part of Your Medicaid Planning Strategy
Many families have concerns about making the transition into a nursing home. This family’s primary concern was that they did not want to lose all of their wealth in the event that they went into a nursing home. I explained that this was a very common concern of many families. Specifically, with the ever-increasing cost of health care and nursing home expenses, many families end up spending most of their savings in just the first few years. This results in the family being forced to rely on Medicaid to pay for the remainder of their stay in the nursing home.
Protecting Your Assets with an Irrevocable Trust
However, I explained to this family a legal strategy that would allow them to protect their assets from nursing home spend down, resulting in the loss of their savings. I informed this family that lawyers often refer to this strategy as an Irrevocable Medicaid Trust. This means that a trust is a separate legal entity that would now hold all or a majority of your assets that would be subject to being spent prior to becoming qualified for Medicaid.
Important Rules to Consider
I proceeded to highlight two very important rules and restrictions that come with this type of Medicaid planning. I explained that once this trust has been set up and all of your assets are transferred in the name of the trust, you will not be allowed to remove any assets from the trust and put them back into your own name. In addition, you will not be allowed to revoke this trust in the future. A trust protector can be appointed in the future that allows a lawyer to amend your trust document so that it conforms with your wishes.
Lastly, I discussed with this family the most important rule. That is, in order to protect your assets from Medicaid spend down, you must set up this Trust at least five years before you transition into a nursing home. Therefore, it is very important that you set up this trust as soon as possible, so that you can start the five year look back clock.
For More Information
If you have questions regarding how to use an irrevocable trust for the best estate planning strategy for you and your family, please contact our office for a complimentary visit so that we can discuss your estate planning needs.
We look forward to hearing from you!