There are a number of very useful things that can be accomplished through the creation of a revocable living trust. Assets in this type of trust can be distributed outside of probate, and this is one advantage. Secondly, you can include spendthrift protections if you are concerned about the money management capabilities of a beneficiary.
Some people would consider the fact that you can revoke the trust entirely to be a benefit as well, because they feel a sense of security. However, you have to consider the implications when it comes to Medicaid coverage.
Why would you care about Medicaid if you’re going to qualify for Medicare as a senior citizen? The answer to this question is a simple one: Medicare does not pay for long-term care. Around 70 percent of seniors will someday need living assistance, so this is a huge elder law issue.
Nursing homes and assisted living communities are quite expensive. If you have to spend two or three years in a nursing home toward the end of your life, the bills could be well into the six figures, and this can consume everything you wanted to leave behind to your loved ones.
The Medicaid program will pay for long-term care if you can obtain eligibility. You may be aware of the fact that this program is only available to people with very limited financial resources.
If you establish and fund a revocable living trust, the assets in the trust would be counted by Medicaid if you were ever to apply for coverage. This is because of the fact that you retain incidents of ownership since you can in fact revoke the trust, you can also act as the trust administrator while you are alive and well.
That’s the bad news when it comes to trusts and Medicaid eligibility. However, there is also some good news to report. If you want to use a trust to get assets out of your own name so that you can potentially qualify for Medicaid coverage, you could establish an irrevocable Medicaid trust.
It does not take a legal expert to surmise that you cannot revoke or dissolve this type of trust, so you are surrendering incidents of ownership. As a result, assets in the trust would not be counted by Medicaid.
We should point out the fact that you could create an income only Medicaid trust. The principal would not count as your personal property if you were to apply for Medicaid, but you could continue to receive income from the earnings of the trust.
Medicaid Planning Consultation
Our firm can help if you would like to discuss Medicaid planning with a licensed professional. Click the following link to send us a message requesting a no obligation consultation: Grand Forks ND Medicaid Planning.