An important part of estate planning is planning carefully to meet healthcare and long-term care needs. Creating a Medicaid trust allows estate planners to qualify for long-term care coverage through Medicaid while protecting their assets for their chosen beneficiaries.
When you work with an experienced attorney to create a Medicaid trust, you can prevent your hard-earned assets from being used to pay for long-term care. If you have questions about Medicaid trusts or other estate planning matters, please contact Jones Gregg Creehan Gerace. Our Pittsburgh trust attorneys have extensive experience helping clients protect their assets and meet their estate planning goals.
The Importance of Qualifying for Medicaid
Many of us will need to be admitted into a long-term care facility. These facilities can easily cost over $8,000 per month. Estate planners may see their savings and retirement assets dwindle away to cover their long-term care expenses.
Most seniors will rely on Medicare to cover their long-term healthcare expenses. However, Medicare only covers long-term care stays under limited circumstances. Even when Medicare does pay for long-term care expenses, they only do so for a limited number of days, usually up to two weeks.
Most basic health plans do not include long-term care coverage. Unless you purchase an expensive, standalone long-term care insurance policy before you need the coverage, you will likely need to pay your long-term care expenses out-of-pocket, risking your entire retirement nest egg.
Medicaid Eligibility Requirements
Unlike Medicare coverage, Medicaid does cover long-term care expenses, but Medicaid is a “needs-based” benefits program. Medicaid uses an income and “countable resources” limit when determining eligibility. Becoming eligible for Medicaid benefits allows estate planners to receive insurance coverage for stays in long-term care facilities. However, it’s difficult to qualify for Medicaid.
Generally, applicants must prove they have an extremely limited income and amount of assets. Although some assets, such as a primary vehicle and residence, are exempt from consideration, it’s still easy for a retiree to have non-exempt assets exceeding the countable resources limit. If your assets exceed the limit, you must “spend down” your excess assets before Medicaid approves your benefits application.
How Does a Medicaid Trust Work?
Medicaid trusts are irrevocable. As the name implies, irrevocable trusts generally can’t be revoked during your lifetime. Income is payable to the trust creator for your life, but the principal assets in the trust cannot be applied to benefit you or your spouse. Upon your death, the principal assets remaining in the trust will be paid to your beneficiaries. A Medicaid trust can help you meet Medicaid’s asset limits if you have excess assets.
When you transfer your assets into an irrevocable Medicaid trust, the assets won’t be counted against you to meet Medicaid’s asset limits. In other words, the trust will protect your assets from being counted when your eligibility for Medicaid benefits is being assessed.
The assets in the trust won’t be considered part of your wealth because the trust is the legal owner of the assets. Medicaid trusts allow individuals who would otherwise be ineligible for Medicaid to become entitled to these benefits. These trusts can also be used to protect your assets and your family.
Considerations for Creating a Medicaid Trust in Pittsburgh
If you’re considering establishing a Medicaid trust, there are several things you should consider. For example, you should consider who you will appoint as a trustee to manage the assets in your trust for your beneficiaries. The trustee you appoint will be in charge of managing the assets, so it’s important to choose a person you trust. You should also consider whether you believe you have at least five or more years left before you’ll need to be placed in long-term care.
You should also consider whether you will be able to meet your financial needs from the trust’s income. The estate planning attorneys at Jones Gregg Creehan Gerace can help you make informed decisions. If a Medicaid trust will be beneficial and meet your goals, we can help you create a trust that complies with state and federal laws and meets all requirements related to Medicaid eligibility.
The Benefits of Creating a Medicaid Trust
The main benefit of creating a Medicaid trust is to make yourself eligible for Medicaid benefits. Instead of seeing your savings used on long-term care and other medical expenses, you will be able to use your Medicaid benefits. Your children or other heirs will be able to receive your estate after you pass away. A Medicaid trust established by a skilled attorney will allow you to comply with Medicaid’s complex laws and regulations regarding asset limits.
Protecting Your Assets for Your Beneficiaries
In addition to helping you become eligible for important public benefits, a Medicaid trust will also help you protect your assets from creditors for your beneficiaries. Suppose you transfer your assets directly to your child or loved one during your lifetime. Doing so could expose the assets you’ve gifted your child to creditors and lawsuits. If your child gets divorced, it could expose the assets to being taken by your child’s ex-spouse.
The assets you’re attempting to protect could be unintentionally lost to different, but just as dangerous, legal concerns and creditors. Additionally, if you put your assets in your child’s individual name, he or she could immediately spend those assets. If the assets are available during your lifetime, your beneficiary may not use the assets wisely. Placing the assets into an irrevocable trust allows you to maintain more control over your assets. You can place stipulations on how and when your beneficiaries receive the assets. Additionally, if you gift assets outright within five years of applying for Medicaid, these transfers will be held against you because they fall within the look-back period.
Contact a Medicaid Trust Attorney in Pittsburgh
If you’d like more information about the benefits of a Medicaid trust, it’s crucial you reach out to a skilled attorney. You’ll benefit from working with a skilled attorney who can draft a trust compliance with all relevant regulations. Contact the attorneys at Jones Gregg Creehan Gerace to schedule an initial consultation and learn more about how we can help you protect your assets and meet your estate planning needs.