Medicaid and the Living Trust

You've probably received a postcard or an advertisement seen to offer a seminar on "Living Trusts" and all the benefits that they claimed. Basically, a living trust is a trust you create and fund during the course of life and that you retain the right to modify and at any time. They have their place and can be very useful under the right circumstances, but the question today, whether they are useful if you can apply for Medicaid.

The problem with living trusts for someone to applyfor Medicaid is that everything is in the name of the living trust as an asset titles available, even if he was free outside the Living Trust. For example, your home is exempt (up to $ 500,000), but if you act in your Living Trust, it suddenly loses its exemption. That alone can cause you became ineligible for Medicaid, forcing you to your house deed from the trust back in your own name. The same would be true for your car or your other personal property.

NowBank accounts and investments can certainly be in the name of the title of the Living Trust, since such assets are counted, whether in your name on the title or the name of the Trust. However, if you're single, you have to spend down those assets in each case in order to qualify for Medicaid, so that a dubious benefit.

Since you have to basically remove all the trust assets, and then rename it back to your own name, as you can see, it makes absolutely no sense to pay an attorney toCreating a Living Trust for you if you're single and over the long-term care, and if you think you may have always wished apply for Medicaid at some point.

If you are married, it is possible for the community spouse (ie, not the spouse in the nursing home) to assets that are in the name of the title is a Living Trust, but there is usually little advantage here in a state like Colorado, which is relatively inexpensive and simple probate procedures.

In fact, there area kind of confidence that the community spouse may be funded by the community spouse until after his death, holding the assets for the benefit of the nursing home spouse may not count against the spouse of Medicaid eligibility criteria. However, such a trust can not be used in a Living Trust, and can only be used in a will.

So the lesson of all is that living trusts for general estate planning purposes may be useful, but are inappropriate - or worse - in a situation in Medicaid planning.