Medicaid Trust

When it comes to having a Medicaid trust, let the elder law attorneys at ElderLawLexington | McClelland & Associates, PLLC, help you. If you are wondering about a Medicaid trust, you most likely have a parent or loved one who is getting older and facing the possibility of an extended stay in a nursing home. This type of long-term care is not inexpensive. If a person faces a long-term stay in a nursing home or assisted living, then usually that person would like to preserve their assets instead of spending them on nursing home or assisted living costs. With careful planning at ElderLawLexington, one can make gifts, qualify for Medicaid, have Medicaid pay for the nursing home and keep some of the assets in the family.

If a person is making gifts as part of Medicaid planning, then making the gifts to a trustee of a Medicaid trust is a safer alternative than making the gifts directly to someone else.

When it comes to having an irrevocable Medicaid trust, let the elder law attorneys at ElderLawLexington help you.In order to qualify for Medicaid, there are limits on the assets a person is allowed to have. This means that the person will most likely have to transfer some of their assets in order to reduce the amount of property they have to their name. The most effective strategy is to make gifts. The gifting parent must transfer assets to the trustee of the Medicaid trust. This requires deeds, assignments and re-titling of other assets into the trustee’s name. Medicaid trusts normally hold all of the assets until the person dies. Once the gifting parent dies, the Medicaid trust distributes the assets to the beneficiaries named in the trust. This avoids fees, delay and publicity of the probate.

A Medicaid trust is not like a revocable living trust. A revocable trust does not work for Medicaid. The irrevocable Medicaid trust is a possible solution available to those people seeking to implement a strategy that seeks to insulate some or all of a person’s assets from having to be committed toward long-term nursing care costs. One cannot change the Medicaid trust. It must be irrevocable. The person making the gifts cannot be the trustee or a beneficiary. For the Medicaid planning to work, the gifting parent must transfer assets to the trustee of the Medicaid trust. A Medicaid trust or "spend down” trust preserves the trustor’s assets in anticipation of a possible long-term disability.

In order to prevent the complete loss of wealth during a disability, the elder law attorneys at ElderLawLexington can guide the couple in how to "spend down” their assets by using gifts and trusts. The purpose of this is two-fold:

  • First, the spending down strives to insulate the disabled person’s assets from the claims of healthcare providers and government agencies.
  • Second, and more substantially, "spending down” attempts to impoverish the disabled person so that they may qualify for various types of federal and state assistance such as Supplemental Security Income, In-Home Medical Care Services and Medicaid.

A Medicaid trust is simply a means of sheltering wealth, similar to tax shelters and using other trusts to avoid having assets placed into an estate.

Some considerations for an irrevocable Medicaid trust:

  • This asset protection tool works well for people who have accumulated substantial wealth and can live on the income that the wealth generates.
  • This is a useful tool to protect your home.
  • This tool can be implemented shortly before or after a person has been admitted to a nursing home, assuming the grantor is competent and/or has created a power of attorney that authorizes the establishment of the irrevocable Medicaid trust.

ElderLawLexington | McClelland & Associates, PLLC, has the experience and knowledge to help you avoid the financial ruin associated with the high cost of long-term care. Contact us at (859) 543-0061 to learn more about a Medicaid trust.