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What Is a Medicaid Asset Protection Trust?

Understanding when to use the Medicaid asset protection trust

In a perfect world, no one would ever have to worry about how to pay for the cost of long-term care when they need it. Unfortunately, the high costs of long-term care make it difficult for people to save the money they need to pay for care and most people don’t buy and maintain long-term care policies when they are young and well enough to do so. Many seniors have to depend on Medicaid eligibility to help cover their nursing home costs. But qualifying for Medicaid doesn’t mean you have to first deplete your assets and resources. Careful Medicaid planning allows you to protect your resources and assets while also helping you plan to pay for long-term care expenses.

How does a Medicaid asset protection trust work?

A Medicaid asset protection trust helps individuals and families plan for the future need for Medicaid eligibility while also protecting their assets. Medicaid asset protection trusts are a valuable tool used in estate planning. These trusts allow a Medicaid applicant to transfer the ownership of countable assets into the name of the trust to become exempt assets. A Medicaid asset protection trust must be an irrevocable trust, meaning the grantor cannot cancel or change the trust.

A grantor is the individual or couple who are creating the Medicaid asset protection trust. Neither the grantor nor their spouse may be a trustee, but they are allowed to name other family members such as their adult children as trustees. A trustee is the person responsible for managing and controlling the assets within the trust. The trust establishes the rules the trustee must follow when managing the trust. Finally, the grantors name beneficiaries who benefit from the trust when the grantor passes away.

The creation of a Medicaid asset protection trust needs to occur long before the grantors need to apply for Medicaid benefits because these trusts are subject to the Medicaid five-year look back rule.

What are the benefits of using a Medicaid asset protection trust?

There are many benefits to using a Medicaid asset protection trust in your estate plan. The most obvious benefit is the Medicaid asset protection trust allows you to qualify for Medicaid benefits when you need them without forcing you to spend down your assets before you are eligible. These trusts also protect the Medicaid applicants’ assets from Medicaid estate recovery once the grantor passes away. Medicaid estate recovery occurs after the death of a Medicaid beneficiary to reimburse the state for the costs paid by the state for the Medicaid beneficiary’s long-term care.

Experienced Kansas Medicaid planning lawyers help you protect your assets and qualify for Medicaid

It is always best to plan for the costs of long-term care well before you need it. The compassionate Medicaid planning attorneys at Stockton & Stern, LLC have the experience necessary to act as your trusted advisors and guide you through the complex Medicaid planning process. Our lawyers are knowledgeable in today’s Medicaid and estate planning laws. To schedule your appointment to speak with one of our trusted Medicaid planning advisors, call us at 913-856-2828 or contact us online today. Our convenient office locations include Gardner, and Overland Park, and we are available to meet you at your home if needed.