FREQUENTLY ASKED QUESTIONS: Irrevocable Trusts

No. Qualification for Medicaid depends on many factors, including the amount of money you put in the trust, the money outside the trust and how long the money has been in the trust. There is a Five- Year Penalty Period for assets transferred to the trust. When you apply for Medicaid you need to disclose to the government the assets you’ve put in the trust for the last five years. Often one of the goals is to get past the five-year period where the government looks back before applying for benefits. If you need to apply before the five-year period has expired, a penalty period may be calculated at the time the Medicaid application is submitted. During that time, you are not eligible for benefits. Because each transfer of assets into the trust causes a penalty period, we recommend not adding money to the Trust without consulting your attorney because often it causes an adverse penalty period and messes up the original planning.

Should Checks I Receive Monthly from Social Security and My Pension Go Into My Medicaid Irrevocable Trust?

Monthly checks that come to you such as Social Security and Pension should not be added to the Medicaid Irrevocable Trust. Adding such assets to your trust may restart a 5-year lookback period for those assets. Again, it is important to discuss adding additional money to the Irrevocable Trust with your attorney to weigh the pros and cons.

May I Make Repairs to Assets in The Trust or Use Money Outside the Trust to Set up Accounts or Pay Fees?

You should not ever use money outside the trust to repair assets in the trust such as real estate, pay fees or set up accounts. That is considered an addition to the Trust which may cause an additional penalty period or lookback period.

Do I Receive the Income that My Medicaid Irrevocable Trust Generates?

Your Trust may or may not allow the grantor to receive income from the Trust. It is important to discuss this topic with your Elder Law attorney.

Is There a Way in An Emergency to Access Principal?

Yes. Sometimes principal is needed to save the day. If this occurs, I will advise you or your trustee how to legally access principal without violating the terms of the trust. This should not be done without an attorney’s assistance and it is imperative that all records and receipts be kept. NEVER pay providers directly from the Medicaid Irrevocable Trust. This will corrupt your Medicaid Irrevocable Trust and that money will not be protected. There is a special way the Trust can be accessed in emergencies; we advise all of our clients to contact us if they EVER need to access principle. Moreover, your children should not take money out of your Medicaid Irrevocable Trust for themselves.

What Happens if I Need Nursing Home Assistance Before the 5-Year Time Limit Is Up?

If this occurs, please contact me and I will advise you or your trustee.

What Happens After the 5-Year Lookback Expires?

At this time, please contact me and we will schedule a meeting to determine if now is the appropriate time to put in a Medicaid application or spend down assets which were left out of the Trust. Remember, laws can change, so it is important to contact your attorney at the end of 5 years to determine what, if any, law changes may affect your plan.

When I Create the Trust, May I Decide Who Receives My Assets in The Medicaid Irrevocable Trust when I Die?

Absolutely! Not only may you decide who should receive the assets when you are deceased, but you may change the beneficiaries during your lifetime.