Protecting Your Assets from Nursing Homes with Irrevocable Living Trusts

The out-of-pocket costs of nursing homes can quickly deplete your savings. While Medicaid can cover the costs of some or all of your nursing home expenses, the federal program is restricted to those of very limited financial means. In other words, there’s a good chance you have too much money to qualify for Medicaid. However, there is a loophole. You can qualify for Medicaid even if you control substantial assets. You just have to remove the assets from your estate. This can be accomplished using an irrevocable trust. An irrevocable trust can protect your money from the high costs related to skilled nursing. This is a good option for those who require extensive dementia care and want to subsidize the costs of nursing homes using government programs. In this article, the Virginia Beach estate planning attorneys at the Law Office of Angela N. Manz will discuss how irrevocable living trusts can be used to protect your assets from nursing homes.

What is an irrevocable living trust? 

A trust is essentially a container for assets. It is also a legal entity that many people create as part of their estate plan. The grantor (or owner of the trust) transfers assets into the trust. A trustee is appointed to manage the assets in the trust for the benefit of one or more beneficiaries.

Trusts can be revocable or irrevocable. With a revocable living trust, you can make changes to the trust after establishing it. This includes removing assets from the trust. Irrevocable trusts, on the other hand, cannot be changed after they are established. Transferring assets to the trust is a one-way process. Once in an irrevocable trust, assets cannot be removed.

What is a Medicaid trust? 

A Medicaid trust is a type of irrevocable living trust meant to offset the costs of nursing homes. These trusts are established to help individuals qualify for Medicaid using an irrevocable living trust. Unlike Medicare, Medicaid is only available to individuals with limited financial means. Each state determines its own Medicaid eligibility requirements. In most states, the annual income limit is $29,160 or less. This includes Social Security, pension benefits, wages, and investment income. Financial resources such as bank accounts, investments, revocable trusts, and real estate cannot total more than $2,000. So, to qualify for Medicaid, you have to transfer these assets out of your estate and relinquish control over them. The upside is that you get to determine what happens to them after you pass. Further, you won’t have to worry about running out of money.

An irrevocable Medicaid trust is designed to get an individual below the Medicaid asset limit without depleting their assets.

Talk to a Virginia Beach Estate and Trusts Attorney Today 

The Law Office of Angela N. Manz represents the interests of those who need to create a Medicaid trust in order to pay for costs related to skilled nursing. Call our Virginia Beach estate planning lawyers today to schedule an appointment, and we can begin discussing your next steps right away.