There are some misconceptions that people harbor with regard to trusts. The idea is that you would be giving up control of assets for one reason or another. This is true to a large extent, but there is more to the equation.
Revocable Living Trusts
There are various different types of trusts. Some of them are revocable, and there are also irrevocable trusts, and this is a very significant distinction. If you have been under the impression that you should use a will to express your final wishes because your situation is uncomplicated, you may find that a revocable living trust is a better choice.
First off, as you can see from the name, you can revoke the trust if you ever want to take back direct personal possession of the assets. Plus, you can act as the trustee and the beneficiary while you are alive, so you maintain control of the actions of the trust.
The fact that you do not lose control of the assets can be looked upon as a positive. At the same time, because of the fact that you are retaining incidents of ownership, a revocable living trust will not satisfy some objectives that people often have.
One of these objectives would be nursing home asset protection. Most people will need long-term care eventually, and Medicare does not pay for it. Medicaid does pay for long-term care, but you cannot qualify if you have significant assets in your own name.
You may naturally assume that assets that you convey into a revocable living trust would not be counted if you ever apply for Medicaid to pay for long-term care. In fact, the assets would be countable for Medicaid purposes, because you would have the power of revocation, and you would control the actions of the trust in a direct manner throughout your life.
All is not lost when it comes to using a trust as a nursing home asset protection tool. While it is true that a living trust won’t help, you could go in another direction and convey assets into a Medicaid trust. This type of trust would be irrevocable.
The principal that you convey into the trust would not be counted by Medicaid if you ever apply for coverage. However, you could receive income from the trust’s earnings while you are living independently.
Since there are Medicaid asset limits, if you ever do apply for Medicaid, the income may go toward the cost of the care that you are receiving.
Protect Your Assets
If you would like to discuss nursing home asset protection with a licensed professional, send us a message through the following link to request a consultation: Indianapolis IN Nursing Home Asset Protection.