Revocable Trusts Are Not for Medicaid Planning

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A revocable trust is not used in Medicaid planning. According to the Medicaid program, assets in a revocable trust are still considered available resources for eligibility purposes.  This is because the grantor of a revocable trust has full control of and access to the money and property in the trust, and thus can utilize those assets to pay for long term care needs and does not need the assistance of the Medicaid program.

The primary reason for creating a revocable trust is to avoid the probate.  Probate is the process by which a Last Will and Testament is submitted to the Court for approval after death.  For many people, the probate process can be a simple one.  There are several factors which may arise to make the probate process a difficult one; in those instances a revocable trust may be a better alternative than relying on Probate.

If you are seeking to protect your assets for the purpose of qualifying for Medicaid you must transfer your assets into an irrevocable trust.  While there are many types of irrevocable trusts, this article is referring to the Medicaid Qualifying Trust.  Placing your assets into a Medicaid Qualifying Trust also avoids probate but it also provides the added benefit of asset protection.  Neither you nor your spouse can be the trustee of this trust but you can retain certain powers over the trust that allow you some control.  You can maintain the right to change the trustee and also the right to change the beneficiaries throughout your lifetime.  The trust can give you the right to receive any and all income produced by trust assets, including interest and dividends on stock accounts and rental income from a piece of real property.  There are no additional reporting requirements on your taxes and you continue to get all property tax exemptions on real property owned by the trust (i.e. Veteran’s exemption, STAR, Enhanced STAR).

Oftentimes a client will tell me their assets are in a trust, not realizing that all trusts are not created equal.  If you have a trust and are unsure of its type or what protections it offers you and your beneficiaries, you should see a lawyer who can review the trust terms with you and let you know if your assets are protected.

  • Britt Burner, Esq. and Nancy Burner, Esq.

Burner Law Group, P.C.

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