By: Michael Gunning
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Supplemental Needs Trust for Medicaid Asset Protection
There are several approaches as to how estate planning professionals feel you should safeguard your assets if you receive essential Long-Term Care benefits from Medicaid, but utilizing a living trust should almost never be considered in this scenario. Instead, we might recommend you use a Supplemental Needs Trust which we’ve expanded on later in this article.
Definition of Revocable Living Trust
A revocable living trust is simply an agreement – whereby an individual, known as a “trustor” in most jurisdictions, will appoint a trustee that determines how the assets within the trust should be managed during the trustor’s life, as well as after the trustor has passed away. This trustor will transfer his or her assets to the trust, which then makes these assets trust property.
Here in Washington State, a Revocable Living Trust is just not the best available option for protecting assets while obtaining Medicaid. A Revocable Living Trust’s asset will be considered as “available” to a Medicaid applicant, and this can and will hurt your eligibility to receive much needed aid.
Any assets which are held in this kind of trust, which will include assets like your home and vehicles – that would not otherwise count, will become countable assets when you setup a Revocable Living Trust. Now any assets which have been placed into this Trust must be spent down in their entirety before Medicaid will pay any of the applicant’s care costs.
If you have already created a Revocable Living Trust, we strongly encourage you to meet with our Elder Law attorneys immediately to discuss whether you may need to make changes to your current Estate Plan.
You May Benefit from a Supplemental Needs Trust
If you’re married, you won’t be able to safeguard assets using a revocable living trust if your spouse requires Medicaid Long-Term Care.
Instead, using a Supplemental Needs Trust, which can be created by your Will, the existing assets will not interfere with Medicare’s Long-Term Care benefits. This type of trust is designed to protect your assets from excessive depletion.
In contrast to assets held by a revocable living trust, assets within a Supplemental Needs Trust will not be considered countable against the requirements Medicaid establishes, and most importantly these assets cannot be obtained by the state government.
Using Asset Protection For Your Estate Planning
Our knowledgeable Spokane & Kennewick Elder Law Attorneys can help you protect the valuable assets you worked hard for, while keeping you eligible to receive Long-Term Care benefits from Medicaid. We will work hard to design an Estate Plan for Asset Protection that is designed to meet your financial goals and safeguard your accrued assets.
Did you know? Matthew M. Luedke was recognized with a special distinction from Thomson Reuters as a Super Lawyers 2020 Rising Star for Estate Planning and Probate! Matt & our other Estate Planning Attorneys would be happy to meet with you to discuss your needs. Call our office at 509-328-2150 today to setup a physical or virtual appointment and take care of any planning matters you’ve been putting off.
Need more help understanding Medicaid and Medicare eligibility requirements? See this resource for more information.