Planning for the future is one of those tasks too many people ignore or put off until it’s too late. The reality is that estate planning can happen at any stage of life, and the sooner you do it the better your loved ones are protected and the better you are protected. If you decide to wait until much later in life not only do you risk dying without an estate plan, but you also risk your eligibility for important government programs like Medicaid.
In order to qualify for Medicaid, you must first pass through income eligibility. Medicaid is intended for low-income individuals and some people are right near that cutoff line. We want to help you preserve your eligibility through what’s called a Medicaid Asset Protection Trust.
Medicaid Asset Protection Trusts
Establishing this type of trust is similar to many other trust-based plans. MAPTs fall into the irrevocable trust category, meaning any assets placed in the trust must stay in the trust unless you’re given explicit legal permission to make changes.
This can feel like a bit of a risk, but you can still utilize the assets even while they’re owned and managed by the trust. What this type of trust does for you, though, is keeping assets placed in the trust out of the calculation of your eligibility for Medicaid. This means if you’re right near the line but place expensive assets into the trust then you’ll likely fall under the line and receive Medicaid benefits.
Five-year look-back window
Medicaid eligibility isn’t established at the point of application. Instead, the program takes a look at the last five years of your life from the moment you apply. This means if you were over the eligibility level during those five years then you will not qualify for Medicaid.
Why this is important to understand for your estate plan is that you’ll want to establish and fund a Medicaid Asset Protection Trust at least five years before you plan to apply for Medicaid. Medicaid is for people who are 65 or older, meaning you should plan to establish a MAPT by age 59 at the latest.
One last note is that you’ll have to be careful in choosing beneficiaries for the MAPT. You can’t name yourself or your spouse as the beneficiary of the trust’s assets. If you do then Medicaid will consider those assets in calculating your eligibility. Keep this in mind when you determine who will receive the assets held in your trust.
At Hedtke Law Group, we want to make sure you’re able to take full advantage of all the programs available to you as you age. Contact our team and get a full review of your estate and ensure you’re able to preserve eligibility with a rock-solid estate plan.