Asset Protection, Medicaid, and Nursing Home Planning
It’s important to make appropriate plans now so that you can receive any care you need without draining your assets. There are several aspects to consider, including asset protection, Medicaid eligibility, and the possibility that you will need to reside in a long-term care facility.
Establishing an asset protection trust can ensure that your assets are protected and available for use either by your spouse, who is able to remain living in the community or for your children or other relatives, even after you enter a long-term care facility. By placing your assets into an asset protection trust, they will not be drained if you need to enter a nursing home and your spouse or children would be able to use and benefit from them.
It is important to understand that if you establish an asset protection trust with the intention of protecting your assets from being used against your long-term care, the trust must be irrevocable. This means you cannot take the money back once you put it in. You will be able to use the money by working with your trustee and following the rules according to Pennsylvania law, but it will not be yours to do whatever you’d like at whatever time you choose. This might seem like a drawback, but it can be worthwhile in the long run if it means your assets are protected later in life. Discussing the pros and cons with an attorney is the first step.
Medicaid Eligibility and Long-Term Care
If you are considering establishing an asset protection trust in part to preserve your eligibility for Medicaid, it is important to understand the rules regarding eligibility. Perhaps the most important rule is the five-year “look back” used by Medicaid in Pennsylvania and all other states. According to this rule, any assets placed into a trust within five years of your applying for Medicaid will be counted when determining your eligibility. As a result, if you want to use an asset protection trust to preserve your assets and also to become eligible for Medicaid, you will need to transfer your assets into the trust at least five years before applying for Medicaid.
Making sure you follow the rules and meet the eligibility criteria will take careful advance planning. If you meet with an attorney well in advance in order to make plans for your future, you’ll be in the best position to use the options available to you. You will preserve the most options if you engage in long-term estate planning at least five years before you expect to need long-term care in a nursing home or another facility.