According to statistics published by the University of Scranton, approximately 45% of Americans make New Year’s Resolutions, and the most popular goals are health related (approximately 38%). While weight loss books are flying off the shelves, and gym attendance is at an all time high, we should not forget to pre-plan for sickness as well as health. It is critical to have an asset protection plan in place in the event of a long-term care illness, such as dementia, Alzheimer’s, stroke, etc. A properly drafted irrevocable trust can be utilized to ensure future eligibility for Medicaid, in the event that you are in need of long-term care.

The first hurdle in Medicaid eligibility planning can be avoided by simply starting early. All transfers made subsequent to January 2010 have a five year look-back period. Any gift made within 5 years of the application results in a penalty period; effectively delaying your ability to receive Medicaid coverage. This can result in an unwelcome depletion of your assets, so it is important to plan ahead.

A medicaid trust effectively allows the Settlor (the creator of the trust) to make a transfer to the trust, while maintaining control over who will receive income from the trust principal. With an outright gift, the donor gives up complete control, and with it the ability to determine a successor beneficiary. An irrevocable trust, on the other hand, allows the settlor to name successor beneficiaries; whether it be a charity, a continuation in trust for the benefit of descendants. Furthermore, the Settlor can retain the right to receive income. This decision should be made with caution, as any interest the Settlor retains in the trusts income will be counted for Medicaid eligibility purposes. Even if the Trustee does not make distributions to the Settlor, the power alone is sufficient for inclusion when calculating the applicant’s income. There are a variety of factors that should be weighed when making decisions regarding distributions to the Settlor; thus, it is important to have the assistance of an attorney that can design the trust to enhance the benefits and mitigate the pitfalls in relation to your exact estate.

Ultimately, a Medicaid Trust allows you to maximize future eligibility for Medicaid, while protecting your assets,  mitigating the loss of control, and ensuring an inheritance for your beneficiaries. 

 

So Lose Weight, Lift Waits; but Don’t Wait to Plan Ahead! ! For more information on successful Florida estate planning and asset protection techniques, please contact the South Florida law firm of Wild Felice & Partners, P.A. at 954-944-2855 to schedule your free consultation.

It’s a Wild world. Are you protected?SM