Medicaid Asset Protection Trust

Our lawyers may recommend a Medicaid Asset Protection Trust for you if you:

  • Are concerned about preserving assets for your spouse or other family members.
  • May require Medicaid benefits for long-term nursing home care in the future, even if current health is not an issue.
  • Do not have long-term care insurance, or have not taken any other steps to cover long-term care nursing home costs.
  • Have people you trust, such as adult children, who can serve as Trustee(s).

A Medicaid Asset Protection Trust is an irrevocable trust. Properly managed and funded, after five years, all of the principal will be deemed an unavailable asset if you apply for Medicaid, and will be preserved for your family.

How It Works:

The Medicaid Asset Protection Trust is an irrevocable trust and can be a highly effective asset preservation strategy. It allows you, the "Grantor," to create the trust and to name one or more persons - other than yourself or your spouse - to manage the trust. You may give detailed instructions as to how the assets are managed. You may even retain the right to change the trustee at any time if the trustee is not managing the assets to your satisfaction, or for any other reason.

You are entitled to all of the income, for yourself for your lifetime. You may also make the income available to your spouse. As Grantor, you retain the right to direct the trustee to give gifts of the principal to your children or others, although no distribution can be made from the trust to you. Of course, your children are free to use the principal as they see fit, including spending it on your needs.

The Medicaid Asset Protection Trust generally pays income only to you, the Grantor - for example, interest on CD's or stock dividends - but limits your access to the principal. While assets placed in the trust can be managed by the trustee and bought and sold as before, you and your spouse may not draw on the principal for your own needs. You can, however, direct your trustee to make gifts to other family members.

  • You continue to have full use of any real estate placed in the trust.
  • Although the trust is irrevocable, you have the right to change the beneficiaries.
  • In the unlikely event that you ever need to terminate the trust, you may do so if the trustees and beneficiaries agree.
  • The principal generally stays in the trust until your death, at which point the trust assets pass directly to your heirs, without the expense and delays of probate.

You do not need to put everything you own into a Medicaid Asset Protection Trust. As Grantor, you can keep as much of your assets as you wish outside the trust, in order to maintain your financial independence. Any assets that remain outside the trust, however, should be held jointly or in a separate living trust (revocable Trust) in order to avoid Probate.

As you can see, The Medicaid Asset Protection Trust can be a highly effective asset preservation tool. It is also highly complex, and must be discussed with, and designed and drafted by an experienced elder law attorney.

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