Too many assets for Medicaid? Set up a special needs trust

by | May 15, 2017 | Estate Planning, Firm News |

Are you a Medicaid applicant or beneficiary and over your resource limit? Having too many assets may disqualify you for long-term care through Medicaid. Thankfully, setting up a special needs trust can prevent you from disqualification.

Holding your assets in a special needs trust can also help you become eligible for Supplemental Security Income. To understand more about your options, review this quick guide to special needs trusts in New Jersey.

The basics of special needs trusts

Federal and state laws establish and regulate special purpose trusts. Due to this, the state will not penalize you for transferring resources to this type of trust if you establish it correctly. In your situation, you want to set up a first-party trust, also known as a self-settled trust. This means it will consist of your own assets.

Meeting the requirements

To set up a first-party trust, you must meet the following requirements:

  • You must deposit all assets into the trust before turning 65 years old.
  • You must have a disability outlined by 42 U.S.C. 1382c(a)3).
  • The trust must be irrevocable.
  • The trust must be set up for your sole benefit.

If you meet these qualifications, you can move forward.

Accounting and expenditure needs

Each state has unique guidelines for handling resources and expenditures. In New Jersey, you must provide a detailed listing of assets, receipts and expenditures during the accounting period. This includes the amount, date, purpose and payee of every expenditure. You must also notify the Division of Medical Assistance and Health Services of any expenditure over $5,000.

Medicaid eligibility is important for your long-term health and wellbeing. While you might be worried about qualifying, there are solutions for you. Establishing a special needs trust can help you get the care you need while protecting your assets. Due to the complex nature of setting up a trust and qualifying for Medicaid, you might benefit from consulting a certified elder law attorney.