How certain trusts can help you preserve your eligibility for Medicaid

On Behalf of | Dec 2, 2020 | Medicaid Planning And Asset Protection |

Individuals wishing to qualify for Medicaid must be low income and have limited assets. In most jurisdictions, you become ineligible for Medicaid if you own more than $2,000 in assets. Turning over what you have to loved ones to qualify for Medicaid may land you in legal hot water. There are other ways to preserve your eligibility for benefits should you need them to pay for long-term care, however.

Strategies that may help you preserve your access to Medicaid benefits

One asset protection option that may also help you maintain your Medicaid eligibility is setting up an income trust, such as a Qualified Income Trust (QIT).

QITs are a type of irrevocable type of trust that you can place your excess money into to protect your Medicaid eligibility. Some jurisdictions place a cap on how much you can “spend down” any extra funds put into the trust, whereas others allow you to do so more freely. It’s in situations such as the latter where you can appoint a trustee to distribute trust funds to cover reasonable expenses as they arise.

An Asset Protection Trust (APT) is another ideal way of preserving your assets that you should have in your estate planning arsenal. One of the many benefits of placing money or valuable items in an APT is that it allows your beneficiaries to avoid paying capital gains taxes on any fair market value increases for your assets. The downside to placing your property into such a trust is that it ceases to belong to you once you do so. This factor makes an APT ideal for preserving your eligibility for Medicaid.

How to choose a trust that’s right for you

There are many trusts out there, each with their own set of pros and cons. An experienced attorney here in East Hanover can help you sort through the different options that exist. Your attorney can also advise you of other ways you may be able to maintain your eligibility for Medicaid benefits as your circumstances change.