When assets are placed in a trust in order to establish or maintain eligibility for government programs such as Medicaid or Supplemental Security Income (SSI), the trust must be irrevocable. That means the person creating the trust, the grantor, is irrevocably (permanently) giving up ownership of and control over the assets. If the trust is revocable, it can be revoked or amended at the option of the grantor – in other words, the grantor still has control over the assets and has the ability to re-establish ownership. If a trust is revocable, the assets in it are considered “resources” that can be used to pay for the person’s medical or disability needs.
Usually a revocable trust will disqualify the grantor from eligibility for Medicaid or Supplemental Security Income.
If you already have a trust created for estate planning purposes, your trust should be evaluated by an Elder Law attorney. Typically, this type of trust will be a revocable trust, or a so-called “living trust.” These trusts work well if the only goal is estate planning. However, they are not asset protection trusts, and the assets held in such trusts will be counted as your own resources for Medicaid eligibility purposes.