You may have worked hard to build a nest egg in the hopes that it will provide a comfortable lifestyle for your future and allow for financial security. However, if you or your spouse need long-term care, your savings and investments might not be adequate.
A diligent estate planning attorney could ensure you have a financial plan. Taking thoughtful steps before you need long-term care could preserve your assets so that you and your family are prepared for anything that may happen in the future. A Melville asset protection lawyer from Tully Law Group, PC, could help incorporate long-term care planning into your estate plan.
Medicaid funds most of the long-term care in the U.S. Unfortunately, Medicaid eligibility is means-based, and many people find that their accumulated assets disqualify them from Medicaid. They must spend down their assets to qualify, which leaves a spouse and children with little to live on.
For many people, a Medicaid asset protection trust is a solution. A person could put their assets, including their home, into the trust. Doing so preserves the right for someone to live in the home even when their spouse receives Medicaid long-term care benefits. Other assets in the trust could provide an income to the spouse who remains in the home, and it could also improve the quality of life of the person receiving long-term care.
According to New York Social Services Law § 366 (2), certain assets do not count when calculating Medicaid eligibility. Some assets cannot be included in a Medicaid trust. A Melville attorney could review an individual’s specific financial situation and advise how to fund a trust to meet their needs to protect their future.
To be effective, a Medicaid asset protection trust must be irrevocable. The trust must designate someone other than the creator of the trust or their spouse to be trustee. An adult child of the trust creator often serves as trustee. The trust’s creator can change trustees at any time and for any reason.
Property placed in the trust must be titled in the trust’s name, and property in the trust can be sold. For example, if a spouse must go into a care facility, the trust could sell the family home and use the money to buy a suitable property for the spouse who still lives independently.
Although the trust is irrevocable, it can be extinguished if all the named parties—usually the creator, their spouse, the trustee, and the beneficiaries—agree in writing. A family considering revoking a Medicaid asset protection trust should consult a Melville attorney from our firm about the possible consequences of dissolving the trust.
Speeding the approval of Medicaid benefits with the assistance of a Melville attorney is an important benefit of setting up an asset protection trust, but there are others. Assets in the trust are protected from creditors and do not have to go through probate. When property passes to heirs through a will, it is subject to the claims of the deceased person’s creditors. Only after the creditors are satisfied will property transfer to the heirs. After the creditors take their share and probate expenses are paid, the heirs might receive considerably less than they were expecting.
Property in a trust passes directly to the beneficiaries immediately upon the death of the trust’s creator. There is no delay, no probate expense, and the creator’s creditors have no claim on the property in the asset protection trust.
Few people can afford the cost of long-term care out-of-pocket. At the same time, most people will not qualify for Medicaid long-term care benefits without careful planning.
Ideally, you will talk about the eventual need for Medicaid eligibility when you make your estate plan. However, even when you need the benefits soon, there are steps you can take to preserve some of your assets. Contact a Melville asset protection lawyer from Tully Law Group, PC, today for an initial consultation.
