Old age and infirmity often create the need for long-term care, including placement in nursing homes and assisted living facilities. But the costs of long-term care can be considerable. Elders may require the benefits available through Medicaid in order to cover these expenses. However, Medicaid has specific income and asset limits. If you have too much income or assets, you may not be entitled to benefits. Additionally, Medicaid may seek reimbursement from your estate for any benefits that are provided. A way to get around these problems is to create a trust, which is a tool for sheltering and transferring assets.
A Medicaid asset protection trust is a separate legal entity that can own and manage property. Placing your assets in a carefully prepared trust means they won’t be counted when determining Medicaid eligibility and can’t be used as reimbursement sources. However, there are important restrictions. The trust must be irrevocable and it must be created five years in advance of an application for Medicaid long-term benefits.
Irrevocability of the trust means you are permanently giving up ownership and control of the property in it. The property is in the hands of a trustee who is bound to use it according to the trust directions. You cannot serve as a trustee, nor can you be a beneficiary to whom trust assets are distributed. You can receive interest and dividends from trust property, but that income will be considered in determining your Medicaid eligibility.
Medicaid has a five-year lookback period for determining an applicant’s eligibility. That means any assets owned by the individual during the five years before an application can be counted, even if they are subsequently transferred away or put into a trust. If your assets were sizeable enough during that time, you must wait five years after creating the trust before you can apply.
Many types of property can be included in a Medicaid asset-protection trust, such as real estate, personal property, bank accounts, stocks, bonds, mutual funds, investment accounts and cars, boats and other vehicles. However, certain assets, like IRAs and other qualified accounts, must be liquidated in order to be placed into the trust.
Significantly, if your primary home is included in the trust, you may continue to reside there for life. Upon your death, the trustee transfers ownership of the house and the rest of the trust assets to your named beneficiaries. The assets cannot be seized by Medicaid as reimbursement for benefits paid.
Medicaid planning can be complex and it's crucial to have a knowledgeable attorney who can guide you through the process. The estate planning attorneys at Gesmonde, Pietrosimone & Sgrignari, L.L.C. regularly assist clients in Connecticut with creating trusts that meet their specific needs. To schedule a consultation at our Hamden or East Haven office, call 203-745-0942 or contact us online.
Gesmonde, Pietrosimone & Sgrignari, L.L.C. is located in Hamden, CT and serves clients in and around North Haven, Hamden, Waterbury, Bethany, Milford, Wallingford, Prospect, Woodbridge, Northford, Madison, Beacon Falls, Branford, Cheshire, North Branford, East Haven, Naugatuck, Meriden, Ansonia and New Haven County.
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