Medicaid Asset Protection
What are the benefits to planning ahead with irrevocable trusts for Medicaid eligibility? There are several. First, you are achieving a future that has certainty. You have a definite time line, beyond which you have a definite answer, meaning Medicaid eligibility. With assets protected in the irrevocable trust, future Medicaid eligibility may be as simple as merely filing an application. Furthermore, despite any law changes that occur making asset protection planning more strict, these will not affect you. For instance, if a homestead, which is ordinarily exempt in almost all circumstances, becomes a countable asset after a short confinement to a care facility, having the homestead as a part of the irrevocable trust protects that homestead – forever.
With Medicaid, the rules regarding irrevocable trusts are less restrictive. In other words, you lose less control over your assets when implementing Medicaid asset protection planning. You maintain multiple options. Not only can you select your Trustee, you can remove the Trustee. You can maintain your rights to all the income earned from the irrevocable trust assets. And, you keep the ability to change your mind until your death about who your beneficiaries will be.
Finally, there’s flexibility even if you have a medical crisis within the Medicaid waiting period. As mentioned above, when you move forward, you are getting certainty. But, if that certainty is disrupted because of a medical emergency, and if keeping the irrevocable trust intact doesn’t make sense, there are mechanisms within the irrevocable trust to return the unused assets to you. What has been lost? In the end, really nothing other than the initial efforts put forth for the pre-planning.