Why consider a Medicaid asset protection trust?

On Behalf of | Mar 31, 2022 | Medicaid Planning And Asset Protection |

A common concern among the elderly is that a nursing home will take all their savings and assets to cover the cost of their care.

A Medicaid trust is a legal means that allows you to protect your assets while still receiving Medicaid benefits. This type of trust can be an excellent option for those who want to ensure they have the coverage they need in case of an unexpected illness or disability without worrying about their finances. If you’re considering a Medicaid trust, here are some things to keep in mind. 

Benefits of a Medicaid trust

For a single person living in New Jersey, you can only have $2000 in assets to qualify for Medicaid to pay for long-term nursing care. For a married couple, it is $3000 in assets.

If your assets are greater than that, you may be required to use those to cover your nursing home stay – and that could mean selling much of what you own, including any real estate you may have. Unfortunately, this leaves less of your estate for your beneficiaries if you pass away. Furthermore, you may be subject to capital gains taxes on the property you have to sell.

With a Medicaid asset protection trust, you name a trustee to manage your assets. You can transfer your qualified retirement accounts, vehicles, valuable personal items, some life insurance policies, and even your house. By transferring these into a trust, you can protect them from Medicaid’s spend-down requirement and estate recovery.

Two important things to remember are that a Medicaid asset protection trust is irrevocable. Also, New Jersey reviews any assets you transfer during their five-year look-back period. Therefore, it is essential to begin planning your trust as soon as possible.