What is Medicaid trust?

Medicaid Asset Protection Trusts, sometimes called Irrevocable “Income Only” Trusts or Medicaid Trusts, are used to protect assets and allow people to qualify for Medicaid long-term care.

What is the purpose of a Medicaid trust?

Simply stated, these trusts protect a Medicaid applicant’s assets from being counted for eligibility purposes. This type of trust enables someone who would otherwise be ineligible for Medicaid to become Medicaid eligible and receive the care they require be at home or in a nursing home.

What are the disadvantages of a Medicaid trust?

The biggest disadvantage to a Medicaid trust, for most people, is the fact that the trust is irrevocable, meaning that no changes can be made once the trust becomes effective. It also means that the assets transferred into the trust permanently become the property of the trust.

Do trusts count against Medicaid?

Medicaid considers the principal of such trusts (that is, the funds that make up the trust) to be assets that are countable in determining Medicaid eligibility. Thus, revocable trusts are of no use in Medicaid planning. An “irrevocable” trust is one that cannot be changed after it has been created.

How can I protect my money from Medicaid?

5 Ways To Protect Your Money from Medicaid

1. Asset protection trust. Asset protection trusts are set up to protect your wealth.
2. Income trusts. When you apply for Medicaid, there is a strict limit on your income.
3. Promissory notes and private annuities.
4. Caregiver Agreement.
5. Spousal transfers.

Can Medicaid take a house in a trust?

Medicaid rules does allow some irrevocable trusts to own assets transferred by an individual even if the individual is also a beneficiary. In other words, assets in these irrevocable trusts will not subject the individual to a transfer penalty and the assets will not be counted as available resources.

What does the 5 year look back mean?

When you apply for Medicaid, any gifts or transfers of assets made within five years (60 months) of the date of application are subject to penalties. Any gifts or transfers of assets made greater than 5 years of the date of application are not subject to penalties. Hence the five-year look back period.

What do you need to know about a Medicaid Trust?

What is a Medicaid trust? A Medicaid trust is a legal entity that shields your income or assets from being considered when your Medicaid eligibility is determined. What does a Medicaid trust do? A Medicaid trust allows you to qualify for Medicaid even if your income or assets are over the allowed limit.

How does an irrevocable Medicaid Trust work?

The idea behind an irrevocable Medicaid trust is to simulate a gift through the use of a trust. When establishing this kind of trust, the donor typically names their children as trustees and beneficiaries and then funds the trust with certain assets (e.g., their residence and investments).

Can a home be put into a Medicaid asset protection trust?

A number of different types of assets can be put into a Medicaid Asset Protection Trust, including one’s home. When a trustee places his or her home in a MAPT, he or she can continue to live in the home. In fact, it is even possible to sell the home and for the trust to buy another one. However, there is one exception to this rule.

Can a special needs trust be used for Medicaid?

Special Needs Trusts for Assets. If you have too many resources or assets to qualify for Medicaid (rather than income), you can put your assets into a first-party special needs trust or pooled trust and still qualify for Medicaid.