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Medicaid Asset Protection Trusts

In estate planning, there are a number of ways that a trust can be used. Most trusts are created to help you protect your assets, avoid probate, and make sure that your errors are provided for after you pass away. In the meantime, qualifying for Medicaid means that you will have to be “impoverished,” with no more than $2,000 in countable assets.

Part of estate planning involves “spending down” your assets. This does not mean that you will immediately give away all your money, house, cars, jewelry and other property. Rather, before you need Medicaid, you can transfer your assets into a trust. This holds your assets for you and allows you to utilize them, but also ensures that your children or other heirs will be able to inherit whatever you have in your trust without going through the process of probate.

Five-Year Lookback

Gifting your property directly to your child or other beneficiaries may not turn out the way you intended. A child could be sued, sell the property or otherwise get rid of it, lose it in a divorce or a creditor, or will the asset to someone else if the child should pass away before you.

Medicaid has a 5-year period prior to your application during which they look at any and all assets that you have, that you have sold, transferred, or gifted. Anything that is found to be an asset that can be used for nursing home care can either trigger a period of ineligibility or require that they be sold to cover the cost of your nursing home care. This is why transferring assets ahead of time, preferably in some form of a trust, the much better vehicle for protecting your assets than simply giving them away.

Using A Trust to Plan for Medicaid

Should you decide to use Medicaid asset protection trust, there are a few things you'll need to understand. The five-year look-back period, of course, must be taken into consideration when planning your trust. If you and your spouse decide to transfer your assets into an irrevocable Medicaid asset protection trust, understand that it can't be changed once you've transferred everything.  

This is a very specific type of trust is designed to protect your assets from nursing home expenses. The income from your trust will continue to be paid to both of you for the rest of your lives. If one of you goes into a nursing facility, the income will then be paid to the non-nursing home spouse. After the death of both spouses, all assets in the trust will be distributed to your children or any other beneficiaries.

Additionally, the trust will also keep the assets out of the immediate hands of both parties, so they won't be factored into the costs for nursing home care through Medicaid.

The Wisconsin State Law Library also offers a list of resources for estate planning, including trusts.

Your Wisconsin Medicaid Planning Attorney

Medicaid asset protection trust is a valuable part of your estate planning. However, you should not create one without the advice of a qualified elder law attorney to ensure that your assets are protected, and your wishes are carried out.

For all questions regarding elder law and Medicaid planning, speak with a reputable Medicaid planning attorney with Heritage Law Office of Wisconsin, Minnesota, and California. Attorney Brad Sarkauskas has helped people with estate planning for over 20 years. Contact our office at (414) 253-8500 for a free case evaluation today! 

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