At What Time Does an Irrevocable Medicaid Trust Make The Most Sense?

If there is one aspect that makes us worry the most for our clients it is the concept of nursing home poverty. It is a rather common worry of our clients that the assets that they spent a life time to accumulate will be reduced to $0 due to nursing home expenses. In addition, most of our clients that spend the time reading our books and free legal reports understand that when they die, the state has estate recovery rights, and can force the sale of their home after they die so that the state can be reimbursed for all the expenses that were paid out while they were in the nursing home and accepting Medicaid benefits. Therefore, a common question that our clients have include at what time is the appropriate time to set up an irrevocable Medicaid trust?

Unfortunately, this can be a somewhat difficult question to answer. The rules of Medicaid allow an individual to own a home, a vehicle, and a prepaid funeral, plus no more than $2,000 worth of other assets and still qualify for Medicaid assistance. However, the Medicaid rules also allow for people to still qualify for Medicaid by setting up an irrevocable Medicaid trust and funding the trust with all of their assets at least five years before he or she expects to go into a nursing home. However, the trust must be irrevocable and you will not be allowed to remove any of the trust assets out of the trust and put them back into your own name.

Unfortunately, the problem becomes with people not knowing when to set up an Irrevocable Medicaid Trust. However, we have seen all too many times where families set up these trusts way too late and they end up losing most, and many times, all of their assets due to nursing home expenses.

Therefore, we normally advise our clients to begin their Medicaid planning sooner rather than later. In addition, should an individual never enter into a nursing home and not require Medicaid, an Irrevocable Medicaid Trust also provides the benefit of avoiding probate. Therefore, after the individual dies, all of that person’s assets will pass immediately and without delay to the designated beneficiaries in the irrevocable trust without all of the stresses, delays, and tens of thousands of dollars of financial cost required as part of the probate process.

If you have questions regarding irrevocable Medicaid trusts and avoiding nursing home poverty, estate planning, estate and inheritance taxes, and avoiding probate nightmares, then I encourage you to attend one of our many free seminars held throughout the greater Nashville area every month. In addition, I encourage you to request one of our many free legal reports that are available on this website.