Protecting Assets With Irrevocable Trusts. How can I protect my assets from nursing homes?

Nursing homes are expensive and can often drain your retirement savings. However, this does not have to be the case. Protecting your assets with irrevocable Trusts can shield you and your family from the high costs of nursing home care.

Let’s begin by understanding how a Trust works. A Trust is a legal entity created in an estate plan. And is essentially a collection of assets added by the grantor of the trust. Trusts can either be revocable or irrevocable. And the primary difference is you can change what is contained in a revocable Trust, but you cannot change what is contained in an irrevocable trust.

Revocable = Can be changed | Irrevocable = Cannot be changed

Irrevocable Medicaid Trusts are the types of Trusts that help reduce nursing home costs. This irrevocable Trust helps reduce nursing home costs by allowing people to qualify for Medicaid. You can transfer enough assets into your irrevocable Trust to bring your asset’s total value below Medicaid’s limits.

Medicaid is administered by states which determine their own Medicaid eligibility requirements. The general annual income limit is $29,160 or less. This income limit includes Social Security, pension benefits, investment income, and all other wages you might receive. Furthermore, financial resources like bank accounts, investment accounts, revocable Trusts, and real estate usually cannot total more than $2,000. People whose income exceeds the cap may have to use their assets to pay for nursing home care until their assets fall below the Medicaid limits.

Key Limitations of Irrevocable Trusts

Although an irrevocable Trust can help you avoid paying nursing home costs yourself, it does not come without limitations. A few of these limitations include:

• Five-year limit: Assets must be transferred into the trust at least five years before seeking Medicaid eligibility. Therefore, do not wait until the last minute to set up an irrevocable Trust!
• Medicaid doesn’t always pay all nursing home costs: A Medicaid patient in a nursing home still has to use their income to pay nursing home costs. Medicaid usually pays for most or all of the costs, but patients will usually be responsible for some.
• Not all nursing homes qualify: Medicaid only pays for certain approved nursing homes.

In summary, by setting up an irrevocable Medicaid Trust, you can become eligible for Medicaid and avoid paying nursing home costs out of pocket by having Medicaid pay for most or all of your nursing home costs if you qualify. Even individuals with a significant amount of assets can utilize irrevocable Trust to reap the benefits of Medicaid. That’s because Medicaid is a benefit you have paid for your entire life, and by following the rules in place, all of us are entitled to use it when necessary.

For more information about Irrevocable and Revocable Trusts and various other ways, we can protect your assets from the rising costs of nursing home care – call Angel Kane at 615 784-4800 and set up an appointment.