You and your spouse have been discussing your estate. You both have health issues. If you don’t take care of your health, you could lose your life savings.
If you were able to qualify for Medicaid without spending everything you own, this could be a solution for you.
One medical emergency can wipe away your savings
While you are still in relatively good health, you are uncomfortably aware that this could change with little warning. You and your spouse worked hard and saved everything you could. Now, you are nearing retirement — and you want to enjoy this time in your life.
Your health issue could potentially require you to move into a long-term care facility. These are expensive. A Medicaid irrevocable trust may be an option.
Drawbacks and benefits of Medicaid trusts
This kind of trust has its advantages and disadvantages:
Disadvantages:
- Co-op owners cannot include their shares with Medicaid
- You can’t wait to qualify for Medicaid due to the 5-year loopback period
- You want to retain control over your assets
- Your spouse cannot be your trustee
Advantages:
- You can stay in your property
- If you have to move into assisted living, your beneficiaries retain ownership of your property
- This trust may allow you to receive real estate tax exemptions
- Creditors can’t get your property
What is the Medicaid look-back period?
Let’s say that, in order to qualify for Medicaid, you give your assets to family. When you file for Medicaid after doing so, the government will investigate by going back five years to see if you gave away or sold any assets for less than fair market value.
This delays your eligibility for nursing home care — the higher the value of your assets that you gave away the more it will delay your move into a nursing home.