Get A FREE Consultation!
We run out of free consultations every month. Sign up to make sure you get your free consultation. (Free $350 value.)
Menu
In this article, you’ll learn about:
Let’s dig in.
We run out of free consultations every month. Sign up to make sure you get your free consultation. (Free $350 value.)
Yes, placing your home in an irrevocable trust can protect it from Medicaid.
When done correctly, the home becomes the property of the trust and not the individual.
As a result, Medicaid can’t count it as an asset after they consider a specified “look-back” period.
This approach is beneficial because it can help individuals qualify for Medicaid without the need to sell their homes.
However, there are also important considerations to be aware of.
Once the home is transferred to the trust, the original owner might lose some control over the property.
If the transfer to the trust or its setup isn’t done properly, there’s a risk of facing penalties.
Furthermore, the specific rules governing trusts and Medicaid policies can vary from one state to another.
So it’s crucial to understand the local regulations and implications before transferring a property to a trust.
Read More: What Happens To Assets If You Go Into A Nursing Home?
Putting your home in a trust can protect it from Medicaid, but it depends on the type of trust.
An irrevocable trust can shield your home’s value from Medicaid, potentially helping you qualify for Medicaid benefits.
In an irrevocable trust, the grantor (the person who creates the trust) gives up control over the assets placed into the trust.
Once the assets are transferred to the trust, the grantor cannot change, modify, or revoke the trust without the consent of the beneficiaries and/or the trustee (the person or entity responsible for managing the trust).
The trustee is responsible for managing the trust according to its terms and distributing the assets to the beneficiaries as outlined in the trust agreement.
However, transferring your home to the trust must happen at least five years before applying for Medicaid, or else it may not be effective.
A revocable trust, on the other hand, does not protect your home from Medicaid since you retain control over the assets in the trust.
In a revocable trust, the grantor (the person who creates the trust) retains full control over the trust and its assets.
As the grantor, you have the authority to amend, modify, or revoke the trust at any time during your lifetime without needing the consent of the beneficiaries or the trustee.
You can also manage the assets in the trust and change the beneficiaries or the terms of the trust as you see fit.
The control only shifts to the trustee and beneficiaries upon your death or if you become incapacitated, as specified in the terms of the trust agreement.
Read More: What Happens When Medicare Stops Paying For Nursing Home Care?
Revocable trusts can be changed or revoked by the grantor, while irrevocable trusts cannot be changed after creation.
For Medicaid, assets in a revocable trust are still considered countable, potentially affecting eligibility.
When assets are considered “countable” for Medicaid, it means they are included in the calculation of an individual’s total assets when determining their eligibility for Medicaid benefits.
Medicaid is a government program that provides medical assistance to low-income individuals, and eligibility is often based on financial need.
Different Medicaid programs have specific asset limits that applicants must meet to qualify.
Countable assets typically include:
If an applicant’s total countable assets exceed the Medicaid program’s asset limit, they may be deemed ineligible for Medicaid benefits until they “spend down” or reduce their assets to meet the eligibility criteria.
This is where irrevocable trusts can be useful, as assets transferred into such trusts may no longer be considered countable after a specific period, potentially making the individual eligible for Medicaid sooner.
In contrast to a revocable trust, assets placed in an irrevocable trust are usually not counted for Medicaid eligibility after a certain period.
Irrevocable trusts may provide more protection for assets from Medicaid spend-down requirements.
When you go into a nursing home, your assets may be used to cover the costs of care.
The nursing home will assess your finances to determine your eligibility for Medicaid.
If your assets exceed the limit, you may need to pay for the care privately until you meet the Medicaid requirements.
Certain assets, like your home, may be exempt from consideration, but it depends on your specific situation and the laws in your state.
Your home may not be exempted in certain situations, and the rules can vary depending on the state you live in.
Here are some common reasons why a primary residence might not be exempted if you go into a nursing home::
Read More: How To Protect Parents’ Assets From Nursing Homes
In general, nursing homes can take your house if you can’t afford care.
Medicaid rules allow a “look-back” period of up to 5 years to check for asset transfers.
If you transferred your house during that time, it might affect Medicaid eligibility.
If you can’t pay for care, Medicaid could put a lien on your home.
Read More: What Are The Disadvantages Of Putting Your House In A Trust?
If your house is in a trust, a nursing home cannot take it to cover your nursing care costs.
Trusts can offer protection from such situations.
In general, if your house is in either a revocable or irrevocable trust, it may provide protection from nursing home costs.
If a nursing home can take your house even though it’s in a trust, it’s likely due to certain exceptions or circumstances that may exist.
Some common reasons include:
Read More: Tax Implications Of Transferring Property Into A Trust
To avoid nursing homes taking your house:
If you can’t plan ahead, consider Medicaid-compliant annuities.
Read More: What Assets Cannot Be Placed In A Trust?
The Medicaid Look Back Period is a time frame when Medicaid checks your financial transactions.
It’s 5 years before applying for Medicaid.
The goal is to find any gifts or transfers of assets.
Medicaid wants to ensure people didn’t give away assets to qualify.
If they find such transfers, a penalty period might be imposed.
During this period, you can’t get Medicaid benefits.
It’s important to plan finances carefully to avoid issues during the Look Back Period.
A Medicaid Asset Protection Trust’s cost varies.
Initial setup can be $1,000 to $3,000.
Attorney fees depend on the complexity of your situation and the estate.
There are also ongoing fees for management.
Costs can ensure asset protection for Medicaid eligibility.
It’s important to get exact pricing from an estate planning attorney.
Here are other questions clients ask us about protecting their homes from Medicaid.
Yes, an irrevocable trust can protect assets from Medicaid.
When assets are transferred into an irrevocable trust, they are no longer considered personal assets of the original owner.
Therefore, they typically aren’t counted when determining Medicaid eligibility.
However, there’s a five-year look-back period.
If assets are transferred to the trust within five years before applying for Medicaid, there can be penalties or delays in eligibility.
Planning ahead is crucial to avoid these penalties.
Read More: Does Your House Have To Be Paid Off To Put It In A Trust
Yes, Medicaid can pursue estate recovery on a jointly owned home after a recipient’s death.
The home may be at risk depending on state rules.
Some states may not pursue the home if a co-owner still lives there, while others might place a lien on the deceased’s share of the property.
The exact approach depends on your state’s regulations.
Read More: How To Put House In Trust With Mortgage
If you need a Medicaid asset protection trust, fill out the form below.
We have the experience to make sure that:
Talk soon.
We run out of free consultations every month. Sign up to make sure you get your free consultation. (Free $350 value.)
You want to invest into your future. Whether that’s protecting yourself with a prenup, getting a fresh start with divorce, or setting up your estate. You deserve reliable attorneys who get results. Fill out the form above for your FREE consultation.
This website is for informational purposes only. It is not legal advice. Consult an attorney if you are seeking legal advice. Check out our privacy policy.