A revocable trust does not protect your assets from Medicaid. Because you can change or cancel it at any time, Georgia treats everything inside it as assets you own.
Many families create a revocable trust thinking it will protect their money from the state. However, if a parent needs nursing home care and applies for Medicaid, the assets in the trust are counted. This can cause the parent’s assets to exceed the eligibility limit.
Nelson Elder Care Law can offer better asset protection strategies. We have served hundreds of Georgia families. Find out how our estate planning lawyers in Woodstock can help you handle life’s curveballs when you schedule your free Legacy Planning Meeting.
What is a Revocable Trust?
A revocable trust is a legal arrangement you create during your lifetime and fund with your property. You typically name yourself as the trustee, which means you continue to manage the trust assets just as you did before.
The key feature of a revocable trust is the ability to change or revoke it. Because you retain this level of control, assets in a revocable trust generally remain available to you and, as a result, the trust is not an effective Medicaid planning tool.
When you die, the assets held in the trust can pass to your beneficiaries without going through the probate process. Nelson Elder Care Law can offer advice and assist you with estate planning decisions.
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What Are Common Mistakes With Trusts and Medicaid?Not all trusts are meant to accomplish the same purpose. It is important to consider your goals and family situation when making important choices. Our team at Nelson Elder Care Law can help you avoid common mistakes.
Choosing a Trust That Does Not Align With Your Goals
People often confuse a trust designed to avoid probate with a trust designed to protect assets from long-term care costs.
- Probate planning addresses what happens to your assets after your death.
- Medicaid planning addresses how your assets may be treated when determining eligibility for long-term care benefits during your lifetime.
These are two different planning objectives, and you need to understand what each type of trust is meant to achieve.
Waiting Too Long to Establish a Trust
Some families also assume they can transfer their assets shortly before applying for Medicaid and still qualify without consequences. Certain transfers made within five years of applying for benefits may still count in your eligibility calculation.
This may result in a period of ineligibility for Medicaid long-term care benefits.
Choosing the Wrong Type of Trust
Another common misconception is that simply placing assets in a trust keeps them out of the government’s calculation. Depending on how a trust is structured, its assets may still be treated as available to you when Medicaid eligibility is determined.
If Medicaid planning is your goal, a revocable trust is not the right tool for the job. Nelson Elder Care Law may offer a better solution in our Absolute Protection Trust™.
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What is the Absolute Protection Trust™?
A traditional irrevocable trust is intended to be permanent once established. Because the grantor gives up ownership and control of assets transferred to the trust, this type of trust can help shield assets from being counted toward Medicaid eligibility.
Our Absolute Protection Trust™ is designed to provide the asset-protection benefits of an irrevocable trust while incorporating additional flexibility for future changes. You can protect your assets while remaining eligible for benefits, but still make specific changes as your life evolves.
Our team at Nelson Elder Care can help you get started. You will have a Personal Planning Team that will help review your goals and make sure your trust is properly funded.
What is the Five-Year Look-Back Period in Georgia?
Georgia Medicaid reviews transfers of assets made during the five years before you apply for Medicaid coverage of nursing home care. The evaluation aims to assess whether assets were moved for an amount below their fair market value during that time frame.
If an asset is transferred during the five-year look-back period and the transfer is determined to be uncompensated and subject to a penalty, Medicaid may impose a period of ineligibility. In other words, Medicaid will not pay for covered nursing home care during the penalty period.
Transferring assets to a trust within five years of your application can be considered a transfer for Medicaid purposes. Reach out to our team at Nelson Elder Care Law as soon as possible to give yourself the greatest chance of avoiding this setback.
Talk to Our Medicaid Planning Attorneys
A revocable trust does not protect your assets from being counted toward your Medicaid eligibility. Families applying for long-term care coverage face the prospect of spending down savings, and the spouse remaining at home may be left with limited resources.
Nelson Elder Care Law can offer solutions that allow you to protect assets while qualifying for the care you or a loved one needs. Call today to schedule your Legacy Planning Meeting and tell us about your goals.