The Role of Trusts in Medicaid Planning: What Are Your Options?

Medicaid planning is a critical aspect of estate planning for many individuals and families, especially those concerned about the financial burden of long-term care. One of the most effective tools used in Medicaid planning is the establishment of trusts. Trusts can help you manage your assets in a way that maintains your eligibility for Medicaid benefits while preserving your wealth for future generations. In this article, we will explore how trusts can be utilized in Medicaid planning, the different types of trusts available, and how legal guidance from firms like Klafehn, Heise & Johnson P.L.L.C. can help you navigate your options.

Understanding Trusts in Medicaid Planning

Medicaid is a need-based program that provides health coverage to millions of Americans, including eligible low-income adults, children, pregnant women, elderly adults, and people with disabilities. Because Medicaid is a needs-based program, eligibility is determined based on the income and assets of the applicant. Properly structured trusts can legally shelter or reposition assets so that they are not counted towards Medicaid’s asset limit, thus preserving eligibility.

The Benefits of Using Trusts

Trusts serve multiple purposes in Medicaid planning:

• Asset Protection: Trusts can protect your assets from being consumed by the high costs of long-term care.
• Control and Management: Trusts allow you to designate how your assets will be managed and distributed without jeopardizing Medicaid eligibility.
• Preservation of Family Wealth: By shielding assets within a trust, you can ensure that your wealth is passed on to your heirs according to your wishes.

Types of Trusts Used in Medicaid Planning

Irrevocable Trusts

An irrevocable trust is one in which the terms cannot easily be modified, amended, or terminated without the permission of the grantor, the trustee and the grantor's named beneficiary or beneficiaries. When you transfer assets into an irrevocable trust, you essentially remove most or all of your rights of ownership to the assets and the trust. This type of trust is particularly useful in Medicaid planning because assets in an irrevocable trust are not considered countable assets for Medicaid eligibility purposes, provided that they are transferred five years before applying for Medicaid (to comply with the look-back period).

Revocable Trusts

Revocable trusts, on the other hand, can be altered or terminated by the grantor during their lifetime. While revocable trusts offer more flexibility and control over assets, they are considered countable assets for Medicaid eligibility because the grantor can reclaim the property at any time. Therefore, revocable trusts are generally not used for Medicaid planning purposes.

Special Needs Trusts

For families with special needs individuals, a special needs trust (SNT) can be an invaluable tool. Assets in an SNT are not counted against Medicaid eligibility and can be used to provide for the extra or "supplemental" needs of a disabled individual that are not covered by government programs. This ensures that the beneficiary can remain eligible for Medicaid while still having resources available that enhance their quality of life.

Legal Guidance in Setting Up Trusts

Navigating the rules surrounding Medicaid eligibility and understanding which trust is suitable for your situation can be complex. This is where legal professionals like those at Klafehn, Heise & Johnson P.L.L.C. come in. Our team has extensive experience in estate planning and Medicaid strategies, providing tailored advice to fit your unique circumstances. We can help you:

• Understand the implications of each type of trust.
• Design and implement a trust strategy that meets your Medicaid planning goals.
• Ensure compliance with all applicable laws and regulations to maintain Medicaid eligibility.

Rochester, NY Medicaid Planning

Trusts are a potent tool in Medicaid planning, providing a pathway to safeguard your assets while ensuring you qualify for the necessary benefits to cover long-term care costs. With careful planning and professional legal assistance from Klafehn, Heise & Johnson P.L.L.C. in Brockport, NY, you can utilize trusts to secure your financial future and protect your legacy. Whether you are just beginning to think about Medicaid planning or are looking to revise your estate plan, our team is ready to provide the guidance and support you need.

If you're a New York resident looking for help with Elder Law Planning, reach out to Klafehn, Heise & Johnson P.L.L.C. in Rochester, NY for personalized guidance. Our team is committed to helping you with your unique elder law planning needs in Rochester, NY.

Legal Disclaimer: This article provides general information about legal strategies and guidance for medicaid planning in New York State. It should not be construed as legal advice or a substitute for consulting with an attorney. Each individual's situation is unique, and laws can vary from state to state. For specific legal advice and guidance tailored to your transactions and circumstances, consult with the attorneys at Klafehn, Heise & Johnson PLLC in Brockport, NY. You can contact us here.  Portions of this account are considered ATTORNEY ADVERTISING under the New York State Unified Court System Rules of Professional Conduct (22 NYCRR Part 1200). Prior results do not guarantee a similar outcome.