All our lives, we plan our lives so that we can make the most of it. One of the items on this planning to-do list is preparing for the inevitable arrival of old age. We all know it’s going to happen. You may even have thought about eventually retiring to Boca, loving your life in Hawaiian shirts or muumuus.
Living near a lake or ocean in Florida doesn’t seem that bad. However, ensuring that you get to this life is planning for it. Estate planning provides options where you can do that. As this can include planning for long-term medical care, involving an estate planning lawyer in Brooklyn is important.
Medicaid trust in Brooklyn is one of those tools available. Effective for planning, it enables people to plan provisions continued medical care requires while still protecting their assets and their loved ones’ inheritance.
What is a Medicaid trust in Brooklyn?
The costs of long-term care are continuously rising. What this means is that for many people, their pensions, savings, and current income along with other monetary resources aren’t sufficient to cover the costs of a nursing home.
On the other hand, the same funds that fall short to cover the costs can be way above the cap. This can impact your qualification for Medicaid. Once that happens, there are not too many options left for you to lead a decent post-retirement life.A Medicaid trust in Brooklyn is a solution that enables the person to navigate and find a way through this conundrum.
As mentioned previously, Medicaid trusts allow people to secure the inheritance of their beneficiaries while still being eligible for government aid. The result is the protection of your assets.
Irrevocable
Yes, Medicaid trusts are irrevocable. What this means is that once you sign the papers and set up the trust, you can’t make changes to it. However, this is a non-problem as you will be the one writing the instructions, designating beneficiaries, and assigning a trustee.
The trustee would likely by a child or a close family member as you or your surviving spouse can’t act as a trustee for a Medicaid trust in Brooklyn. Whoever you choose will have to follow through the instructions you clarified in the trust.
If your income exceeds what Medicaid considers the threshold, there is a solution around it. A revocable Income Only Trust or a Medicaid Asset Protection Trust can be used. You will also need a Pooled Trust along with a MAPT.
The goal is to prohibit your access to the principal. When you have assets like your home protected as principals, they won’t be considered yours. What is means is that the Principal will not be used to determine your eligibility during your Medicaid application.
Look-Back Rules
When you are considering setting up a Medicaid trust in Brooklyn, several things need to be considered. One of the main factors to keep in mind is the look-back period.
There is a penalty charged on Medicaid trusts if you transfer an asset in the Medicaid trust. The divestment will result in denial of Medicaid for limited duration.
In the state of New York, the look-back period is 60 months or 5 years. The trust’s failure to uphold asset value for Medicaid during these 5 years can result in the settler being denied Medicaid.
For example, if your nursing home costs are heightened, you won’t be able to simply transfer assets into the Medicaid trust in Brooklyn.
With abovementioned limitations taken into consideration, the smart decision is setting that trust while you’re still healthy and thriving, before you need to apply for Medicaid.
Restrictions
Medicaid trust in Brooklyn comes with its many benefits. However, along with these substantial pros, there are some limitations too. The main drawback here is the loss of control over assets.
The Medicaid trust, or supplemental needs trust, may direct that some or all of the income be paid to you, as beneficiary. Said income, when distributed, is counted towards your income eligibility for Medicaid purposes. Therefore, your trustee has to be careful if the income is over the Medicaid cap. If it is, the income will have to be put into a Pooled trust. Your access to the principal, or corpus, of the trust will be restricted.
- In the end, setting up a Medicaid trust in Brooklyn can be quite overwhelming and confusing. You need the expertise of an estate planning lawyer in Brooklyn to supplement what you don’t know or understand. This is crucial for remaining compliant with state and federal laws. After all, it is the matter of your long-term care and family’s protection.
