Trusts shield your home and property.
A trust is a legal structure that allows you to preserve income and assets that would otherwise be lost under Medicaid regulations. Trusts are among the main workhorses of Elder Law planning, and some of its most powerful tools. Here’s how they function to protect your home or any other property you hold.
Let’s say you own a house, condominium or cooperative apartment worth $500,000 in today’s market. You bought it 40 years ago for $35,000, and your loan is paid off Now you need long-term care. The problem is that while your home is an exempt asset for eligibility purposes, Medicaid may eventually require that the equity be used to reimburse the cost of your care. They’ll do that by enforcing a lien against your property when you move out permanently or die. The lien will be equal to the amount of benefits paid.
Costs for long-term care are exorbitant. That means after just a short time, the equity in your home could be exhausted by the amount of the lien Medicaid may eventually be able to enforce. In effect, you’ll be leaving your home to the government to repay Medicaid, instead of to your children or other family members.
A trust strategy eliminates the entire problem. By transferring your home to an asset protection trust, you are no longer the owner. The house legally belongs to the trust. And your property is safe from being subject to a Medicaid lien. (Of course, transfers within the look back period will still be subject to a penalty, if nursing home care is required. See Strategy No. 3.: Plan for Home Care and Nursing Home Facility Care while You Still Can)
ln many instances, parents want to leave homes to children in their Wills. Using a trust can be a better vehicle than a Will for this purpose. That’s because the trust achieves Medicaid eligibility and protects its value. Your home can eventually be transferred to your children, rather than be lost to the government. You don’t have to move because you can state in the trust that you have a legal right to live there for the rest of your life. The beneficiaries of the trust can be the same people named in your Will.
It’s important to know that implementing trust strategies for Medicaid planning is a complex process. Every client situation has individual characteristics and critical differences, which is why you need a qualified Elder Law firm to make a competent evaluation.
Once the firm’s assessment is complete, your Elder Law attorney can draft a trust that is appropriate for you. You then simply appoint a person to manage the trust, usually one of your children, or a relative or friend, who is referred to as the trustee. Professional trustees are also available for hire if there’s no one you feel completely comfortable with.
25 Strategies to Prevent Financial Ruin from Long-Term Health Care Costs
- You can qualify for Medicaid (even if you don’t think so)
- The “Wait and See” Approach can Result in Ruinous Health Care Expenses.
- Plan for Home Care and Nursing Home Facility Care while You Still Can.
- What’s the difference between Medicare and Medicaid?
- It’s NOT too Late for Effective Medicaid Planning (even if you think it is)
- Why Hire an Elder Law Attorney?
- Don’t Prepare Your Own Medicaid Application
- Trusts Can Protect Your Home and Your Money!
- Special Trusts for Specific Purposes
- Protecting Co-op Apartments Require Special Handling
- Evaluate Your 401k or IRA Carefully when Planning for Medicaid
- Why Take the Lump Sum Option on Your Pension or Retirement Account?
- Choose Your Trustee Wisely
- Private Annuities can Help Protect Your Assets
- Caregiver Agreements Help Achieve Medicaid Eligibility
- Keep Your Medicare Insurance
- The Durable Power of Attorney
- Elder Law and Estate Planning
- The Health Care Proxy vs. the Living Will
- How to Choose an Elder Law Firm
- Streamline Your Financial Affairs and Record Keeping
- New York State is More Generous than Other States
- Your Attorney can Help Find the Best Care for You
- Long-Term Care Insurance Won’t Necessarily Solve the Problem
- Compassionate Elder Law Planning Focuses on Your Future Quality-of-Life!