As part of your overall estate plan you may have, wisely, included Medicaid planning. If so, you may have created a Medicaid trust as part of that plan. A Medicaid trust allows you to protect assets while still qualifying for Medicaid should you need it down the road. What happens to assets in a Medicaid trust if you never need Medicaid though?
A Medicaid trust is often used to shelter assets in anticipation of applying for Medicaid at some point in the future. Applying for Medicaid may be necessary if you need long-term care at some point down the road and cannot afford to pay for that out of pocket. At an average yearly cost of close to $80,000, and an average length of stay of 2.5 years, few people and afford to pay out of pocket. While the Medicaid program will cover those costs, qualifying for benefits can be tricky because of the income and asset limits Medicaid uses when determining eligibility. An individual cannot have countable resources that exceed $999 in value. If you assets do exceed that limit you will have to “spend down” your assets before Medicaid will start covering your long-term care costs. To avoid the loss of hard earned assets, people often create A Medicaid trust early on as part of their comprehensive estate plan.
A Medicaid trust is an irrevocable living trust that provides assets protection. Because the trust is an irrevocable trust the assets transferred into the trust are no longer counted as your assets since they are now owned by the trust. While this protects them from Medicaid’s spend-down requirement, they are no longer yours. Therefore, should you never need to apply for Medicaid you cannot simply take the assets back out of the trust. Once the assets are transferred into the trust the trust terms will dictate what happens to them. For this reason it is imperative that your work closely with your Missouri estate planning attorney when you create your Medicaid trust to ensure that the assets held by the trust are distributed as you wish them to be even if you never need Medicaid.
If you have additional questions or concerns about Medicaid planning, contact the experienced Missouri estate planning attorneys at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment.
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