Creating a Medicaid trust in New York comes with a lot of advantages. It allows you to keep your estate out of the probate court, helps you keep your assets out of the reach of a creditor, etc. If you do your Medicaid planning way before time with the help of an elder care lawyer, you might become qualified for the healthcare program, Medicaid. The program provides long-term care to individuals in their time of need. The government then pays for your home health aides, nursing home, and medical care.
Once you understand the process in detail, it might be possible for you to successfully meet the low asset limit of Medicaid while you protect parts of your assets for your heirs. When you transfer your estate to a family member, you don’t have any control over it whatsoever. A revocable trust allows its creator to rescind or change it. The funds of such trust are considered by Medicaid to be countable funds in establishing the eligibility of Medicaid. Therefore, revocable trusts are not taken into consideration when creating a Medicaid trust in New York.
On the other hand, if you put your assets in an irrevocable trust, the case is quite different. A trust is a legalized arrangement whereby an individual known as a trustee is the nominal owner of a property for the good of other beneficiary/beneficiaries. The creator of the trust and its terms and conditions are taken into consideration when deciding whether trust assets are included in Medicaid’s resources or not. Learn which trusts to use when creating a Medicaid trust in New York.
Special Needs TrustsThere are some exceptions in the Medicaid policies for transferring assets to individuals who are under the age of 65 and are disabled. If you need to transfer parts of your estate into a trust for your children, family member, or friend, you can do so. It doesn’t matter if you are in an old age home, you can continue with the process without becoming subject to any kind of ineligibility term. The assets present in properly managed and structured trusts are disregarded when determining the eligibility of a beneficiary’s Medicaid plan. One downside to such trusts is that after the person with special need dies, the state needs to repay any Medicaid money spend on their behalf.
As the name suggests, these trusts are written under a will. According to Medicaid policies, a surviving spouse gets to benefit from a will trust created by a spouse who has passed. There are some technicalities involved in this rule. The only way the funds of a will trust are available to a Medicaid applicant is when their trustee is obliged to provide financial support to them. Otherwise, the assets are unavailable to the candidate.
Therefore, individuals can leave assets for their surviving significant other through this trust which they can then use to pay for expenses that aren’t covered by Medicaid. The expenses may include fees for legal issues, transferring money to another old age home, additional therapy, and more. However, one important thing to take into notice is that a trustee appointed to use your funds for you or your spouse in the time of need can use the funds in your will trust at any time.
Income-Only Irrevocable Trusts
Once you create an income-only irrevocable trust; its terms cannot be altered in any way. This trust allows you to be paid for life. However, your spouse cannot benefit from it in any way. Once you pass, your heirs receive the invested money. This keeps the funds in your income-only trusts preserved and you also get to spend the funds for your personal usage. In such cases, the principal money isn’t considered to be a Medicaid resource. In the case that you transfer to an old age home, your assets have to be transferred to them.
The policies regarding these income-only trusts are very strict and it can get difficult to access your funds even if you urgently need them for a valid purpose. Therefore, it is best to keep some backup money outside the income-only trusts.
We hope the aforementioned information helped you learn about different types of trusts and decide which one is the most suitable for your needs. Lastly, it is recommended to consult an estate planning lawyer before you create a Medicaid trust in New York in order to make a finalized informed decision.