Medicaid Planning with Trusts

Due to the high cost of nursing home care today, many seniors look to Medicaid for help covering the expense. In order to qualify for Medicaid in Georgia, the applicant’s income and assets must not exceed certain limits. As of this writing, the income cap for Georgia Medicaid is $2,382. An applicant can qualify for Medicaid even if income exceeds the cap by using a special type of trust called a Qualified Income Trust or a “Miller” Trust. In addition to the income limit, there is also an asset limit – the applicant may not have more than $2,000 in assets.

Many people consider giving assets away in order to put themselves below the limit.  In an effort to curtail this, there is a fiveyear look back period. Any assets given away during the five-year period before applying for Medicaid must be disclosed and a penalty period is assessed based on the value of the assets.

What can you do if your assets exceed the limits? If you plan ahead, you can use a Medicaid asset protection trust to qualify for Medicaid without having to spend down or give away your assets. By transferring your assets to the trust, you no longer own the assets for Medicaid purposes. After five years, you can apply for Medicaid without having to disclose the assets held in the trust. Since the assets are owned by the trust rather than the Medicaid recipient, they are also protected from recovery by the state at death.

There are some stipulations to consider.  The trust must be irrevocable, meaning you cannot change or amend its terms. You can be the income beneficiary of the trust and the Trustee may distribute any income earned by the assets held in the trust to you or use it to pay for your care. You cannot be the principal beneficiary of the trust. This means you cannot take an asset out of the trust and put it back in your name. Instead, you would name some other person or persons to be principal beneficiaries, such as your adult children or nieces and nephews. Principal of the trust could be distributed to those beneficiaries who would then use the funds to pay for your care.

If the trust owns your residence, you can continue to live in the residence, the Trustee can sell the residence and purchase a new residence for you, or maintain the sales proceeds in investments to provide additional income for your care. If the trust owns an investment account, the income earned on your investments can be used to provide for your care.

After your death, the trust provides for the distribution of any remaining property to your beneficiaries.

Are you concerned about long-term care costs depleting your estate? Contact us today to discuss your options and let us get a plan in place to accomplish your goals.

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