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How a Medicaid trust can work for you

On Behalf of | Sep 28, 2021 | Health Care Planning

Those facing an extended stay in an assisted care facility in Florida may be wondering how best to protect their assets. The process of obtaining long-term care benefits often involves spending down a substantial amount of an individual’s investments, leaving the next generation in his or her family with little or no wealth to build off. To ensure that you’re doing what’s best for yourself while looking out for your loved ones, it’s a good idea to look into an irrevocable Medicaid trust.

An irrevocable Medicaid trust prevents the liquidation of a person’s assets if he or she requires an extended stay in a nursing home. Used effectively, this trust prevents long-term care facility situations to require massive investment spend-down, allowing an individual’s wealth to transfer to his or her children and other family members.

An irrevocable Medicaid trust works by acting as a gift. Donors will oftentimes assign their children to be trustees and beneficiaries. The trust is then funded with assets, such as investments and the donor’s residence.

It’s important to remember that in order to avoid Medicaid penalties, contributions to this trust must be made over five years before applying for long-term care benefits. As long as this is the case, Medicaid eligibility will not be impacted by these assets.

Knowing when this trust is right for you

This may be an effective way for many to protect their assets, but it’s not a fix-all tool and, thus, not for everybody. Since each health care planning situation comes with its own unique set of variables and priorities, individuals must weigh the options for their own particular cases to determine if it’s the right move.

The keyword in this type of health care planning arrangement is “trust.” In some cases, assets could be used by beneficiaries against the donor’s wishes within his or her lifetime. It’s essential to verify that beneficiaries want the same things for these assets as you do.

In many cases, a Medicaid trust helps preserve an individual’s wealth and assets when he or she must stay in a long-term care facility. Simulating gifts by way of this trust enables you to pass on as much as possible to your family.