Medicaid Gifts and Trusts

How Do Assets and Trusts Impact Medicaid Eligibility?

Medicaid eligibility requires minimal personal assets.

Your health care needs will increase as you age.

That is a given.

With this increase, your health care bills will also increase.

That is a given.

Some people turn to Medicaid for financial assistance.

That is not such a given.

What is Medicaid?

Medicaid is a government program managed by states to help with medical and long-term care costs.

It is needs-based, meaning individuals must qualify financially for eligibility.

In order to prevent individuals from merely making transfers of their property, either outright or in trust, to qualify for Medicaid, there is a penalty period imposed on transfers made within five years of applying for Medicaid. 

If an individual establishes a trust using some of his or her own funds, where the individual is the sole beneficiary or one beneficiary in a pool of beneficiaries, the trust may be considered a resource for Medicaid purposes.

This is particularly true if the trust can be revoked — a revocable trust– and the assets can be pulled back into the name of the Medicaid applicant, she said.

Third Party Trust

If the trust is created by a third party, with third party funds, for the benefit of the Medicaid applicant, then the answer would depend on the specific terms of the trust and whether or not the settlor — the person who created the trust — is the spouse of the Medicaid applicant.

That’s because income and asset limitations are imposed on the community spouse in order for the applicant spouse to qualify for Medicaid.

The state may also have the right of recovery against the estate of a deceased Medicaid recipient for Medicaid benefits paid to such individual during his or her lifetime. Always use a ladybird deed or a transfer on death deed for real property.

For starters, you cannot simply transfer (gift) assets to your loved ones to become eligible.

In fact, the transfers would need to occur more than five years before the Medicaid application.

Work with an experienced elder law attorney to determine if Medicaid is a viable option for you.

Contact us at 817.638.9016 

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