Medicaid Asset Protection Trust

Medicaid Asset Protection Trust

What is a Medicaid asset protection trust?  In short, a Medicaid asset protection trust is an irrevocable trust used for protecting assets from Medicaid when going into a nursing home.  It is a great solution to the common question people have about paying for long term care – how to protect assets from Medicaid. Most people’s biggest concern about going into a nursing home is protecting assets from Medicaid because they have heard that Medicaid will take everything they have. However, Medicaid does not come and take anything physically from you.  They simply do not pay unless you qualify. If not, then you have to spend your assets to pay for care.

There are only three ways to pay for nursing home care:

1. You pay out of pocket;
2. Your long-term care insurance policy pays;
3. Medicaid pays.

While long-term care insurance is the best way to pay, most people do not have it.  Medicaid is a government program that pays for nursing home care. However, it can be difficult to qualify for Medicaid. If you have more than a certain amount of assets, $2,000 for an individual or up to $126,420 (2019) for a married person, then you will have to spend down those assets before Medicaid will pay.  This is known as the Medicaid spend down.  The Medicaid spend down is the process where you spend your assets down to those limits.  Any assets that are in your name or your spouse’s name at the time you apply for Medicaid would be subject to the Medicaid spend down.  Therefore, the planning strategy is how to protect assets from Medicaid spend down.

Most people do not mind using some of their life savings to pay for long term care.  However, they do not want to lose everything they have worked for if they go into a nursing home.   As they get older, they become concerned with how to protect assets from Medicaid. Sadly, people do not know how to protect their assets so they make costly mistakes.  They will often just give money to their children or deed their house over to them to protect those assets. There are significant risks and potentially devastating consequences to doing so.   

Once you “give away” your assets to someone else those assets are subject to their creditors and circumstances like divorce, lawsuits, bankruptcy or the risk that your kids spend the money themselves and do not have it if you later need it.  There are also negative tax consequences that can be very costly to your children when you give them assets during your lifetime.

The Medicaid asset protection trust provides all the benefits of giving your assets to your children to protect them without all the risks such as their divorces, lawsuits, tax liens, etc.  An asset protection attorney can talk to you about the pros and cons of using a Medicaid asset protection trust as a solution to the how to protect assets from Medicaid recovery.

There are many kinds of trusts.  An asset protection trust is an irrevocable trust that protects assets from creditors and threats like lawsuits.  Irrevocable basically means that once you put assets into the trust, you cannot get them back into your name. Because you can no longer get the assets, neither can your creditors.  However, you can still invest the assets and live in your home if you place it in the trust.

In addition to providing the asset protections mentioned in the last paragraph, a Medicaid asset protection trust solves the goal of protecting assets from Medicaid.  The assets are placed into the trust to protect assets from Medicaid spend down so that when you pass away, they go to your children or grandchildren. An asset protection lawyer can better explain the advantages of using a Medicaid asset protection trust.   

 Just as there are different kinds of trusts, there are many types of lawyers out there.  It is wise to get an asset protection lawyer who is familiar with the Medicaid rules to draw up a Medicaid asset protection trust for you.   Protecting assets from Medicaid takes careful planning and should be done by an asset protection attorney who is familiar with the Medicaid rules and how to draft trusts that will work to protect assets from Medicaid spend down.  

Finding an attorney who is qualified to help you with protecting assets from Medicaid may seem difficult so people often ask “how to find an asset protection attorney near me?”  You might be able to get a referral from your family lawyer or your financial advisor. You could also just type in “how to find an asset protection attorney near me” in the google search bar.  Once you get some names, you should then look at their website. Do they handle other areas of practice like criminal law or personal injury? If so, chances are they do not focus their practice on asset protection.  Does the website convey confidence and competence? Check out the attorney’s reviews on google and AVVO.com

What do their clients say about them?

How to protect assets from Medicaid recovery is a common goal in estate planning.  Long-term care expenses remain the biggest threat to your nest egg and retirement plan. A Medicaid asset protection trust is a great way to protect some or most of your assets from Medicaid.  At Miller Estate and Elder Law, we are experienced asset protection attorneys and have drafted numerous Medicaid asset protection trusts. Before you make a costly mistake, give us a call or request an appointment online.

We have helped many families with issues involving medicaid asset planning. Many of our clients come in to do planning ahead of time, which is the best way to plan, but we also have a lot of experience working with families dealing with a crisis involving unforeseen health scare or something like that. We have offices in Anniston and Birmingham, and I’m more than happy to help you and your family.

Attorneys specializing in medicaid asset protection trusts near me

Let Us Help You. 

At Miller Estate and Elder Law, we thoughtfully evaluate our client’s needs, then craft estate plans that include the best options. Call us at 256-472-1900 or use our Contact Form to let us know you’re ready to develop your estate plan.