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Philadelphia Area Elder Law


Serving King of Prussia, Springfield and Bala Cynwyd Areas

The Medicaid Trust

One currently-effective planning technique is to transfer assets into a 'Medicaid' trust. In a Medicaid trust, the trust maker retains the right to all of the trust income for life while irrevocably giving up the right to receive or benefit from any of the trust principal. The assets in the trust are not available to pay for the cost of the trust maker's LTC.


By using a Medicaid trust, a senior can preserve capital and still qualify for Medicaid, but only after expiration of the look-back period for the transfer to the trust (which can be as much as 60 months (5 years)).

The 'penalty period' starts from the date the applicant applies for Medicaid and would be eligible but for the disqualifying transfer. Its length is determined by dividing the state's average daily private pay nursing home cost into the total of the transfers made during the look-back period.

For the Medicaid trust strategy to work, insurance, an income stream, or other assets must be sufficient to pay for LTC if needed during the waiting period before applying for Medicaid.

A Medicaid trust can allow the trustee to distribute principal during the trust maker's lifetime for the benefit of the trust maker's spouse, children, or other designated beneficiaries, just not to or for the benefit of the trust maker. Many trust makers choose to maintain the right (called a Special Power of Appointment) to change the current or ultimate beneficiaries of the Medicaid trust by 'reappointing' the assets to different family members at a later date.



Making Gifts

If a Medicaid trust is not desired, it is still possible to make 'outright' gifts of property, wait until the look-back period expires, and then apply for Medicaid or use other planning techniques to qualify for Medicaid at the earliest possible date.

Protecting the Home

If the home is the only asset to protect, a deed to children or others with a retained life estate for the client will protect both the property and the client's Medicaid eligibility upon expiration of either 60 months from the date of the conveyance or the applicable 'penalty period.' As with other advanced planning strategies, because the penalty period begins only after the applicant has applied for Medicaid and is otherwise eligible, other LTC funding should be available to get past the look-back period.

Even if the need for LTC is imminent or immediate, sophisticated Medicaid planning opportunities can be employed to protect a substantial portion of your assets. Carefully working within the Medicaid transfer rules can allow individuals to provide security for themselves and a legacy to their families, while ensuring that they will remain eligible to receive LTC under Medicaid when necessary.

Conclusion

Understanding Long Term Care options, is an integral part of estate planning.

Philadelphia area Estate Planning and Elder Law attorneys Dahlia Robinson-Ocken offers creative planning in the areas of estate planning, elder law planning, wills, revocable living trusts, long-term care asset protection planning, powers of attorney, medical powers of attorney, guardianships, irrevocable trusts, living wills, estate, probate and trust administration, probate avoidance, asset protection and planning for physicians, tax planning, lawsuit protection planning (including professional malpractice lawsuit protection planning), planning for minor children, faith-based planning, Medicaid planning, Veterans benefits planning and resources, charitable planning and gifting, special needs and disability planning, estate tax planning, business law and succession planning, and Medicaid applications and long-term care crisis planning. Dahlia serves the entire southeastern Pennsylvania and southern and central New Jersey region, including Philadelphia, Montgomery County, Delaware County, Bucks County, Chester County, King of Prussia, Springfield, and Conshohocken in Pennsylvania, as well as Camden County, Gloucester County, Burlington County, and Mercer County in New Jersey.

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The Robinson Law Firm | 267.225.DLAW (3529) | Info@ElderEstateLaw.com | 822 Montgomery Avenue, Suite 204, Narberth, PA 19072