Putting together various estate planning tools for the purpose of passing on assets to future generations is wise but thing can become increasingly complicated when it comes to managing these concerns surrounding Medicaid.
Medicaid has very state specific rules that could potentially change over the course of time if you don’t have the right estate planning attorney in your corner to help you with establishing state compliant rules, you could be in for an unpleasant surprise when your loved one needs support from Medicaid. The use of a testamentary trust is one common estate planning strategy that can prove instrumentally helpful.
Since Medicaid applicants are not allowed to have more than a certain amount in assets to maintain eligibility, receiving a sudden inheritance from another person such as their spouse, could put the Medicaid applicant over the cap. This means that the Medicaid applicant would lose benefits at least in a temporary fashion and the remainder of the inheritance would be use on nursing home expenses.
A testamentary trust could be developed based on the person in question and his or her needs. For example, if this was your father, a trust would be created that would establish the father as the beneficiary. The mother’s estate, either all of it or a portion of it, would flow into the trust after debts have been paid out. The trustee then uses the funds to provide for services that are not covered by Medicaid, such as transportation to and from family functions, second medical opinions from physicians, special therapies and private caregiving services. The money will not have to go to Medicaid when your father passes on but can be passed on to other beneficiaries. This is one leading reason to use a testamentary trust, but this should only be crafted with the help of an experienced and knowledgeable attorney. Schedule a consultation today with an attorney who can help you with Medicaid planning and more.
