Medicaid Trusts are an option to consider. With the assistance of an experienced Medicaid attorney, you may be able to preserve some of your estate for your family while satisfying the Medicaid asset limit. In Florida, nursing home residents covered by Medicaid can have only $2,000 in “countable” assets.
When you transfer assets and give them away, you no longer have control. A Medicaid pre-planning gift strategy is to put them in an irrevocable trust. With a trust, an individual or entity (known as the “trustee”) holds legal title to property for the benefit of others, who are called the “beneficiaries.” The trustee is responsible for following the instructions provided in the trust.
The question of whether a trust’s assets are counted against Medicaid’s resource limits is based on the terms of the trust and its creator. Have an experienced Medicaid trust attorney do it legally and correctly.
You may have heard of something called a “revocable trust.” For Florida Medicaid planning, this type of Medicaid trust does not work: this trust can be changed or rescinded by the person who created it, and Medicaid considers the principal of these trusts countable in determining program eligibility.
Medicaid Five Year Trusts
An “irrevocable” trust can’t be changed once it’s been created. A Medicaid trust attorney will draft this trust so the income is payable to the individual establishing the trust (the “grantor”) for life. However, the trust principal can’t be applied to benefit you or your spouse. When you pass away, the principal is passed to your heirs. This Medicaid Five Year Trust is helpful for Medicaid pre-planning because the funds in the trust are protected, and the income can be used for living expenses (as long as the trust is established and funded five years before nursing home Medicaid is needed). As far as Medicaid, the principal in the trusts isn’t counted as a resource, as long as the trustee can’t pay it to you or your spouse for either of your benefits. However, if you move to a nursing home, the trust income will be given to the nursing facility.
These are trusts created under a will. Medicaid rules provide a special “safe harbor” for testamentary trusts created by a deceased spouse for the benefit of a surviving spouse. The trust assets are treated as available to the Medicaid applicant only if the trustee has an obligation to pay for the applicant’s support. If the payments are solely at the trustee’s discretion, they’re deemed to be unavailable. Testamentary trusts can provide a worthwhile strategy for community spouses to leave funds for their surviving institutionalized spouse to be used to pay for services not covered by Medicaid (e.g., special equipment, legal fees, or transfers to another nursing home if that became necessary).
Supplemental Needs or Special Needs Trusts
Medicaid has exceptions for transfers for the sole benefit of disabled people under age 65. After moving to a nursing home, if a resident has a relative or friend who’s under 65 and disabled, the resident can transfer assets into a trust for the person’s benefit without impacting his or her Medicaid ineligibility. Preparing a Supplemental Needs or Special Needs Trust with the help of an experienced elder law attorney will keep the funds in them from being considered to belong to the beneficiary in determining their Medicaid eligibility. One downside to a SNT is that after the disabled individual dies, the state will seek reimbursement for any Medicaid funds spent on behalf of the disabled person.
I trust we have given you some idea of how Medicaid trusts could be a solution for you.
If you have questions about Florida Medicaid, Attorney Frazier is a skilled Medicaid planning (with over 2,000 cases completed that helped preserve their family’s savings), estate planning and elder law practitioner. Please contact Attorney Frazier for a free telephone consultation at 727-586-3306 extension 104. If you prefer click here now to send in a contact form and we will call you.