Medicaid trust
The trust must be an irrevocable trust and must meet all Medicaid and tax requirements. You and your spouse, as settlors, transfer designated farm assets and/or other assets to the trust, which are then considered the divested.
A revocable living trust will not protect your assets from a nursing home. This is because the assets in a revocable trust are still under the control of the owner. To shield your assets from the spend-down before you qualify for Medicaid, you will need to create an irrevocable trust.
Other states, such as California and Texas, prohibit Estate Recovery after the surviving spouse dies. The only exception is if the surviving spouse was also a Medicaid recipient.
No one “takes” assets from the patient; the nursing home simply requires payment for its services if the patient intends to reside in the nursing home.
By setting up an irrevocable trust and transferring into it any assets in excess of the Medicaid financial limits, you can effectively shield those assets from the program's fines and other penalties. One issue here is that assets cannot be transferred back out of the trust, so you have lost control of them forever.
Unless you anticipate the need for nursing home care within the next eight to ten years, the preferred way to plan is to set up a revocable trust along with powers of attorney. This provides that if you are unable to implement your own nursing home planning in the future, someone will be designated to do so for you.
Your home may not be counted as an asset
In California, the equity limit is currently $814,000. In all states, Medi-Cal recipients are allowed to keep their homes, with no equity limit, if their spouse or another dependent relative lives in the home.
The primary disadvantage of an irrevocable trust is that the grantor cannot change the terms or conditions once the trust is established. Consequently, you should be very careful in naming beneficiaries, trustees, and distributions.
Nursing homes do not take assets from people who move into them. But nursing care can be expensive, and paying the costs can require spending your income, drawing from savings, and even liquidating assets. Neither the nursing home nor the government will seize your home to cover expenses while you are living in care.
The Farmland Protection Policy Act discourages Federal activities that would convert farmland to nonagricultural purposes. Prime and important farmland includes all land that is defined as prime, unique, or farmlands of statewide or local importance.
If you are single, need care, and are unable to return home, your home is now an available asset that the government can take to pay for your care. If you are married and your spouse goes into a nursing home, your home is protected as long as you do not need care and it is under the equity limit.
If a parent has become incapacitated, he or she needs to have identified – through a power of attorney – someone who can act on their behalf, for the sale to take place. If the caregiver has no legal authority, then the caregiver has absolutely no right to sell the home.
If you have no money, Medicaid is often the primary option for covering nursing home costs. Other potential solutions include: Veterans Benefits: Veterans and their spouses may qualify for financial assistance. Reverse Mortgages: Seniors who own their homes may use a reverse mortgage to cover nursing home expenses.
If you have existing unpaid medical bills, and go into a nursing home and receive Medicaid, the program may allow you to use some or all of your current monthly income to pay the old bills, rather than just to be paid over to the nursing home, providing you still owe these old medical bills and you meet a few other ...
Many retirees go to nursing homes as their needs increase, creating a dilemma for protecting their wealth. A revocable trust places your wealth in a tax-protected vehicle you can control until you die. But, unfortunately, it won't protect assets from a nursing home.
Once assets are placed in an irrevocable trust, you no longer have control over them, and they won't be included in your Medicaid eligibility determination after five years. It's important to plan well in advance, as the 5-year look-back rule still applies.
It should be stated at the outset that nursing homes and other similar facilities do not “take” people's assets – although it can feel that way! The reality is, any person in need of a nursing home stay is required to pay for the services provided.
Does Medicaid Monitor Your Bank Account? Yes, if you're submitting a Medicaid application, the agency you're sending it to can check your bank account. This makes sense given Medicaid is a need-based program with financial eligibility requirements so they need to verify your assets.
How Much Does it Cost to Create a Medicaid Asset Protection Trust? The cost of creating a Medicaid Asset Protection Trust varies significantly from a low of $2,000 to a high of $12,000. While the price might seem high, in reality, a MAPT ends up saving persons money in the long run.