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Is a Medicaid Trust Right For You?

May 31, 2018 by Port Legal Staff


Medicaid How It Works-01

As we age, many of us require long-term care. Whether it’s for all-too-common ailments related to aging or more serious chronic illness, this care comes at a steep cost. Many people are forced to utilize assets that they intended to pass down to their children or grandchildren to pay for an extended stay in a nursing home or facility.

Fortunately, there are other options available.

Some invest in long-term care insurance, and while that’ a viable option, it’s an expensive one. Many attorneys specializing in elder care law recommend a Medicaid trust. Here are some basic facts about Medicaid trusts to help you determine if you or a loved one would benefit from one.

What is a Medicaid Trust?

Essentially, a Medicaid trust allows the grantor— the person to whom the assets belong— to transfer their assets into an irrevocable trust, which will be distributed to per the grantor’s instructions after their death. The assets are available for the grantor’s use, but they don’t have control over them.

That said, you can’t transfer assets to a trust days— or even months— before you apply for Medicaid. There’s a five year look-back period; basically, Medicaid can look through your assets from as far back as five years prior to determine if you’ll be required to undergo a spend down to qualify.

If you transferred, say, your house into a Medicaid trust just four years ago, you might be forced to sell it in order to qualify for Medicaid.

This isn’t an attempt to force you to divest yourself of your assets; rather, it’s a response to the rampant, systemic fraud that was all too common within the Medicaid system.

Remember, Medicaid is intended to serve people who don’t have the money to pay for their care– not millionaires who want to give all their money to their children.

Why is a Medicaid Trust Beneficial?

It Helps You Avoid Spend Down.

A Medicaid trust will protect valuable heirlooms or assets you’ve earmarked for your family or friends. You won’t have to spend down your assets in order to have your long-term care covered by Medicaid. You will be legally disassociated from the assets, so you’ll qualify for Medicaid with ease.

You Can Keep Your Assets Safe Legally.

Why is a trust required? Why can’t you choose which assets can be exempt from the spend down that’s required to qualify for Medicaid? Unfortunately, that’s against the law. Failure to report assets is considered fraudulent, and you could be subject to fines and banned from the system. If you’re considering hiding assets from Medicaid, don’t— it’s a large governmental entity with long arms, and you WILL get caught.

Keep Your Costs Low.

Bottom line: a Medicaid trust isn’t cost-prohibitive to set up. Long-term care insurance, on the other hand, is an expensive solution that only gets more costly over time. 


A Medicaid trust will not only protect your assets, but it will save you money and help you get the care you need as soon as you need it.


Additionally, you can’t guarantee that you’ll get the coverage you require as you age— if you believe long-term care insurance is the “safer” option, you might find yourself without assistance at the very moment you need it.

Should You Consider a Medicaid Trust?

If you have assets you hope to protect for your children or grandchildren, a Medicaid trust could be an ideal option for you. You’ll rest easier knowing that your legacy will stay intact and that Medicaid will cover any required long-term care or medical expenses that might arise.

However, if you do not have a trustworthy person to be in charge of your trust, it might not be a good solution for you. For example, say that you put your home and your assets into a Medicaid trust well before the time comes for you to enter a long-term care facility.

If the person in charge of your trust does not have your best interest at heart, they could ostensibly put you out on the street—after all, they have control of your home and money. Ultimately, you need to implicitly trust the person you put in charge of your Medicaid trust.

Do you have questions? An elder care attorney can answer them. At Port Legal, we have the knowledge and the experience to guide you through the complex world of Medicaid trusts. Schedule a free consultation to discuss your options with one of our experts today.

Our consultations are completely free of charge and intended to equip you to make the best decision.


Topics: Estate Planning, Health Care, Elder Law,, Elder Care

Port Legal Staff

Written by Port Legal Staff