When people ask questions about trusts, they sometimes paint with broad brushes. They do not understand the fact that there are numerous different types of trusts, and they can accomplish varying aims.
A revocable living trust is a very commonly utilized type of trust. You maintain control of the assets when you create this type of trust, because you have the power of revocation. As the grantor of the trust, you could also control the actions of the trust while it is in place, because you could serve as the trustee and the beneficiary.
These trusts are popular because they give you the ability to include spendthrift protections, and assets can be distributed in a timely manner after your passing, because they would not be subject to the probate process.
The ongoing control can sound like a positive, and it is on the one hand. However, because you do maintain incidents of ownership, assets in a revocable living trust would be counted if you were to apply for Medicaid to pay for long-term care.
Medicaid is a government health insurance program that many seniors who need living assistance rely upon, because Medicare does not pay for long-term care.
A revocable living trust would not be a good choice for you if you want to divest yourself of assets so that you can qualify for Medicaid to pay for long-term care. However, there is a different type of trust that you could use as a Medicaid planning device.
It would be possible to create an irrevocable Medicaid trust. Assets in this type of trust would not be counted by Medicaid evaluators, because you surrender incidents of ownership when you create an irrevocable trust.
You cannot change your mind and revoke the trust, so you have to be certain that you are ready to take this step. However, you could create an income-only Medicaid trust. With this type of trust, you could continue to receive income from the earnings of the trust, but the principal would not be counted by the Medicaid program.
However, if you do eventually qualify for Medicaid to pay for long-term care, the income could go toward the cost of the care that you receive.
Medicaid Planning Report
We have provided a bit of basic information about Medicaid planning and trusts in this blog post. If you would like to obtain more detailed information, download our special report.
This in-depth report is free, and you can access your copy through this page: Medicaid Planning Report.
Schedule a Consultation
Our firm would be glad to assist you if you would like to discuss Medicaid planning with a licensed professional. Feel free to contact us through this page to request a no obligation consultation: Long Island NY Elder Law Attorneys.
- What You Need to Know about Medicaid’s “Look-Back” Rule - February 1, 2023
- What You Need to Know about Elder Financial Exploitation - January 25, 2023
- What Is an Asset Protection Trust? - January 18, 2023