We receive a lot of questions related to Medicaid and irrevocable trusts. Families usually reach us in order to receive guidance when their loved ones receive an unpleasant diagnosis, or they get admitted into an old age home. Under such circumstances, people start gaining knowledge and understanding about estate planning processes in order to protect and preserve their hard-earned money.
One solution to doing so is by creating a Medicaid trust. If you don’t manage your Medicaid trust effectively, you might end up invalidating it.
Therefore, here is everything you need to know about having a Medicaid trust in Queens:
What is the Main Objective of a Medicaid Irrevocable Trust?
The main objective of a Medicaid trust is to help individuals protect their assets from being considered as resources for the process of qualifying for Medicaid. Once this irrevocable trust is created and signed, a new legalized entity is formed.There are four main entities that play an important role in the process. First is the trust protector. In case of any alterations in the law, the trust protector is required to protect the main objective of the Medicaid trust. Second is the beneficiary. The beneficiary/beneficiaries are the individual(s) who inherit from the trust. Next, a trustee has the responsibility to distribute assets and make decisions in accordance with the terms of the Medicaid trust. Lastly, the grantor is the person who creates and transfers funds into the trust.
How Does the Medicaid Trust Enable You to Qualify for Medicaid Services?
A Medicaid irrevocable trust allows you to store your funds in a place where you don’t have any control over them. Once you surrender your legal entitlement over your assets, you restrict your proprietorship. You can then no longer gain access to your principal. Now when you apply for Medicaid services, the principal to your Medicaid trust funds is no longer countable. Moreover, it is vitally important that you keep all receipts and records stored for any future requirements.
What Types of Funds Can Be Placed Into a Medicaid Trust?
After you have successfully created your Medicaid trust in Queens, you can transfer life insurance, mutual funds, stocks, savings account, real estate, money-market accounts, non-qualified annuities, and more. There is one restriction when it comes to transferring your funds into a Medicaid trust. You cannot transfer any qualified funds into your irrevocable trust. Transferring those funds can result in income tax issues. The creator of the qualified account needs to hold the account in their name in case of any problematic consequences.
Should Your Monthly Checks From Your Pension and Social Security Go Into Your Medicaid Trust?
No. The checks that you receive every month from your pension and through social security shouldn’t be placed into your Medicaid trust. Doing so might result in your five year look-back period starting all over again. Make sure that you gather advice from a reliable estate planning lawyer in Queens before you transfer any additional funds to your Medicaid irrevocable trust.
What Is the Look-Back Period (5-Year)?Once you apply to receive medical care and services from the Medicaid healthcare program, any transfers or gifts of funds that are made within the time period of 5 years from the date that you applied for the program become subject to sanction.
What Happens When the Grantor of a Medicaid Irrevocable Trust Passes Away?The testament and the will of the grantor of the Medicaid irrevocable trust don’t have any control over their funds that are owned by the trust. The trust has its own policies and terms. Those rules determine the distribution of the assets. While the process is quite similar to that of the funds-distribution through the last will, it doesn’t involve the probate process.
Can You Gain Access to the Principal In Case of an Emergency?Yes, in case of an emergency, you can certainly gain access to the principal. However, it is highly recommended to do so with some help and consultation from a professional who knows all about estate planning in Queens. Hire a lawyer who can guide you to access the principal in a legal manner so that you don’t end up violating any rules or terms of your Medicaid trust. Lastly, never give payments directly to your Medicaid trust providers. This will result in the corruption of your trust and your money being compromised.
We hope that the aforementioned knowledge about the fundamentals of creating a Medicaid trust in Queens was worth your while. Creating a Medicaid trust is not enough; manage your trust effectively in order to make the most of it!