Medicaid Asset Protection and You: 3 Things You Need to Know
Are you wondering about Medicaid asset protection? Find out what you need to know about irrevocable trusts in this article.
If you’ve been considering protecting your assets in connection with potential long-term care needs, it’s important to understand what your options are when creating a Medicaid asset protection trust. This type of trust is irrevocable. This means that once the trust is created, you will not have the power to dissolve it or cease its existence without the consent of the beneficiaries of the trust. You will retain certain powers such as: (1.) the right to remain in your home as long as you desire without being required to pay rent and without the fear of ever being asked to leave the premises; (2.) the right to change trustees if they do not follow the provisions of the trust; (3.) the right to change who gets the property in the trust after your passing amongst other retained powers. Medicaid asset protection trusts are designed to ensure that specific assets are not counted against you when filing for Medicaid coverage. Because your assets will belong to the trust, they will no longer be in your name and will no longer count as something you own. Before you start the process of creating your trust, there are three important things you need to know about this type of Medicaid asset protection.
1. You can create rules.
When you set up a trust, you will be able to stipulate specific rules and policies such as those listed above. Doing this will ensure that you still maintain control over the assets although they will no longer be in your name. You’ll need to designate a trustee who is in charge of the asset or assets in question; however, the person you choose will need to follow the aforementioned rules. As previously stated, if you are unhappy with the trustee or their adherence to the guidelines you have set in place, you can change the trustee.
2. Your assets will be immediately protected.
In some places, there is a five-year wait for benefits after you create a trust. After that time, the person who transferred their assets to a trust becomes eligible for nursing home benefits. In the state of New York, however, the asset or assets will be immediately protected when it comes to receiving home care. There will not be any waiting period for the person before they are able to claim Medicaid benefits. There is still a five (5) year penalty for claiming nursing home benefits, however. The penalty for claiming nursing home benefits will begin in the month after the asset or assets are transferred to the trust. This type of trust is especially beneficial for larger assets, such as a home. This ensures that the person or family retains control of the home even if it is legally owned by the trust.
3. Your heirs will still benefit.
In some cases, you may be able to design your trust with your heirs and beneficiaries in mind. It’s possible to create a trust that your beneficiaries may draw from on an as-needed basis. This is important since it ensures that you’ll still be able to help care for and protect your loved ones. Regardless of how many heirs you have, this benefit makes it even more important that you plan ahead when creating a Medicaid trust. When you apply for benefits, Medicaid has a “look back” period during which they will check to see if you have recently transferred any assets. Doing this early ensures that your personal assets will not be counted against you when you apply for benefits.
When you’re ready to protect your assets, schedule an appointment with an attorney who can help you. They’ll be able to guide you and ensure that you’re able to carefully plan for the future by protecting your most valuable belongings.