Medicaid Asset Protection Trust

One very useful Medicaid planning technique involves the creation of an irrevocable Medicaid Asset Protection Trust. With a Medicaid Asset Protection Trust a person or couple can transfer some of their property to the trust to hold and manage for their benefit during their live with the remainder paid to their family after their death.

Example: David and Beth have assets in their savings and stock accounts of $250,000. They currently live off income from their investments, social security, and other retirement benefits. They are concerned that if they need nursing home care they will not have enough money to support their lifestyle and pay for the medical expenses for the remainder of their life.

Solution: David and Beth decide to transfer $150,000 to a Medicaid Asset Protection Trust. The trust provides that all income is paid to them while alive and in the event one needs nursing home coverage under Medicaid the income is paid to the other. Upon the death of the surviving spouse, the trust will terminate and distribute the remainder to their children. By using this type of irrevocable trust their assets are protected and they receive an income stream for their lives.

Potential Problems: The gift to the Medicaid Asset Protection Trust can cause a period of ineligibility for Medicaid benefits. The length of the ineligibility period depends upon 1) the value of the assets given away and 2) The date the assets were given away. After the ineligibility period, the assets in the Medicaid Asset Protection Trust should be protected and not counted as a disqualifying asset for Medicaid planning purposes. In addition, this removes the assets from the reach of the spouses.

A Medicaid Asset Protection Trust is not for everyone, but it can be a means of protecting a family’s financial security. These trusts can be complicated and must be tailored to the families resources and needs. It is important that you use a Florida Elder law attorney who is familiar with the Florida Medicaid laws and who has experience in creating this type of trust.

Please note: The Irrevocable Medicaid Asset Protection Trust is not the same as a “revocable trust”, “revocable living trust” or “living trust” that is currently being sold through Trust Seminars.