Elder Law & Medicaid Trusts

Long-term care has changed. It will continue to change too. The question then is whether you’re prepared to either bare the costs, or shelter assets.

Those looking to do the latter – shelter assets, are up against a clock. Sometimes created by health issues, and other times by the Medicaid system itself, this clock has a 5-year time frame. How do you beat the clock when you don’t have a crystal ball to tell if and when you’ll need to plan? Plan early. Regardless of how well you feel.

Of course, it’s not easy to plan ahead of time. That’s why folks often look for attorneys that focus on “elder law” – a field dealing with the needs of the elderly; personal, financial and health matters. We prefer to encourage early adoption of the mindset that sheltering assets sooner, rather than later, makes a huge difference. It helps the clients, their decision-makers and beneficiaries.

Regardless of whether you’re reactive (dealing with the issues that presented themselves and spurred planning) or proactive (planning before any issues dictate your direction), you, or the client, if we’re dealing with a parent, etc., ultimately need no less than an enhanced Durable Power of Attorney, Health Care Proxy with health care directives and HIPAA language, coupled with some combination of a will and trust, unless a life estate deed is a sound option.

Do you need a Medicaid Trust?

Not everyone needs an Medicaid Trust (sometimes referred to as a “Medicaid Asset Protection Trust” [MAPT] by professionals) to accomplish asset protection. People can gift away assets. Use deeds to split ownership. Or, in some cases, take the stance that whatever they have should be spent on them; leftovers can pass on to the next generation.

For those of you that don’t want to: give everything to a child, loved-one, friend, etc.; use a deed alone; or, see if your kids hit the lottery because you’ve survived at home, without the use of Medicaid, a trust may make sense. It may also save your family some cents.

First, you have to ask yourself some tough questions.

Can you give-up control?

When people come to us and ask about Medicaid planning, the first questions posed ask, “Can you give up control … of your assets?  … of your income? … of a certain part of your freedom?” Anyone that can’t answer yes to one or more of those questions isn’t ready for an irrevocable trust. Of course, for those that answer “no,” we hope that they don’t change their minds too late.

Who do you want on the “team”?

Making a trust work requires a team: you, a trustee, and a trust protector.

You are the “grantor” – the person that works with your attorney to create the trust. You set the broad guidelines. Review the terms. Then sign, and “fund” the trust by transferring assets.

Trustees are often family, loved ones or close friends. Still, appointment of professionals and trust companies are common. The latter resulting when you either do not have an individual to select, or want an impartial, business-minded decision-maker.

Rounding out the usual team is a trust protector. Commonly the drafting attorney, the trust protector sits on the bench until called into interpret the trust language or carry out a set role, which you define.

Additional help comes from attorneys, accountants, financial advisors, and other professionals. Your trust generally permits the trustee to hire and fire professionals. That way you, and those that follow have access to people or companies that manage assets and affairs for a living.

What can I control?

The whole point of the Medicaid Trust is to shelter your assets. Not for your benefit, but that of your spouse. Partner. Child. Grandchild. Charity. Thus, you need to understand one basic concept: Medicaid planning is a one-way street. You must draw a line between yourself and your assets.

It’s at this point most clients’ eyes open wide. You mean, give up control? How? Why?

The how is simple – through a document you help craft based on needs. Then review. Then sign. Giving your trustee – generally someone other than you, authority to carry out the terms of the trust agreement. Why? Because keeping control over assets means the government can consider them available to you.

Assets that are available to you are vulnerable. Meaning, the government can expect you to sell or use them to pay for long term care. Or, it can assert a lien against your assets. Either way, you’ll leave less behind to your loved ones.

What rights can I keep? Generally, you keep rights limited to use and enjoyment of real estate. Income generated from investments within the trust. Possibly removal of trustees or changing beneficiaries too.

How do I get started?

Contact our office for a free consultation. We’d be happy to sit down and educate you about the options. The process. The costs, and the timeline.