Whether you realize it now or not, there is a very good chance that you will need to qualify for Medicaid benefits at some point in your life. Medicaid planning, therefore, should be an integral part of your overall estate plan. As part of that plan, you may decide to create a Medicaid trust. Only your Missouri estate planning attorney can help you decide if a Medicaid trust is right for your estate plan; however, it may be beneficial to have a basic understanding of what a Medicaid trust is and why one might be useful.
Statistically speaking we all stand a very good chance of needing long-term care at some point during our lives. The older you are the greater that chance. By the time you reach retirement age your odds of needing long-term care are about one in two. By age 80 those odds increase to three in four. With an average yearly cost approaching $100,000 and an average length of stay of 2.5 years, long-term care can deplete a lifetime of working hard and saving wisely in a short period of time. Don’t depend on Medicare to cover long-term care costs as the program only covers long-term care under very narrow circumstances and then only for a short period of time. This is where the need for Medicaid eligibility comes in to play. Medicaid will cover long-term care costs – but you must first qualify for Medicaid.
The Medicaid program has very low income and asset limits that cannot be exceeded. For a single applicant your countable resources generally cannot be valued at more than $2,000. If you have resources that exceed that amount you must “spend-down” your resources before Medicaid will help cover your long-term care costs. Transferring assets out of your name right before applying won’t work either because Medicaid uses a five year “look-back” period. Any asset transfers during the look-back period will likely be discounted and the value of the transfer imputed back into your estate. This is where a Medicaid trust can help.
A Medicaid trust is an irrevocable trust that allows you to transfer assets into the trust for safekeeping. The terms of the trust will then typically pay out the income earned on the principal to you for your lifetime. Upon your death, the principal is then distributed to children or other named beneficiaries. Because you have no access or rights to the principal of the trust Medicaid does not count those assets as belonging to you for purposes of eligibility.
If you have additional questions or concerns about Medicaid trusts, or Medicaid planning in general, 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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