You may have been a diligent saver your whole life in the hope that you can pass down your wealth and overall legacy to your descendants at the time of your unfortunate death. However, in an expected turn of events, you may find yourself residing in and receiving healthcare from a nursing home facility toward the end of your life. Your stay may become quite costly and threaten to dip into the funds you intended to leave behind for your loved ones. Well, before it is too late, please continue reading to learn whether you can utilize a trust to avoid nursing home costs and how one of the experienced Butler County trust attorneys at Heritage Elder Law & Estate Planning, LLC, can help you protect these hard-earned assets at all costs.
Can I establish a trust to avoid nursing home costs?
Most definitely, a trust is an estate planning tool that can help prevent your assets from being taken to pay off your nursing home costs. Importantly, though, this may only work if you establish an irrevocable trust, not a revocable trust. This is because with an irrevocable trust, you are essentially transferring your ownership over your assets to the trust. And since you no longer directly own these assets, they cannot be taken to pay off your debts.
What should I consider about Medicaid planning in relation to my trust?
After creating an irrevocable trust, you may apply for Medicaid to help you pay for your nursing home expenses. Of note, Medicaid is a joint federal and state program that helps cover medical costs for individuals with limited income and resources. Therefore, since the funds transferred to your irrevocable trust are not considered part of your countable assets, you may qualify for the Medicaid program.
You must understand that timing is everything when it comes to establishing a trust document and then applying for Medicaid benefits. This is because Medicaid has something that is known as the five-year look-back period. Meaning, when you file your application, the state Medicaid agency will review your financial transactions from the past five years to identify any time when your assets were transferred, gifted, or sold for less than fair market value.
And so, if you transferred funds into your irrevocable trust less than five years ago, you may be subject to penalties, namely, delayed eligibility. The penalty period may be calculated by dividing the value of the transferred assets by the average monthly cost of nursing home care in your state. And now that you have fewer assets in your possession, given your irrevocable trust, paying for these nursing home costs in the meantime may be especially damaging.
We understand just how overwhelming all of this can be for you. So, if you have any remaining questions, please consult with one of the skilled Butler County elder law attorneys. The team at Heritage Elder Law & Estate Planning, LLC is willing and able to provide you with legal assistance in any capacity.
