Medicaid Trusts

"Medicaid" Trust

While this type of trust can take many forms, one alternative is a revocable trust wherein the Trustee is given the power essentially to give away all of the client’s property in order to make the client eligible for Medicaid or other governmental assistance should the client become disabled or in need of nursing home or similar care. The Trustee must retain enough assets to provide for the client until such time as the client becomes eligible for such governmental assistance (i.e., during the “look back” period). All other trust assets are then paid over and distributed to the ultimate beneficiaries in the manner set forth in the trust document, typically, in the same manner as if the client had died. Alternatively, the trust can be irrevocable with the client merely having a life estate (see below).

Irrevocable “Medicaid” Trust

This is an irrevocable trust wherein the client (and spouse, when applicable) retains the right to receive all the income from the trust assets during lifetime. Assuming whatever applicable waiting periods are met, the principal of the trust can be protected for the client’s children. The only thing that arguably can be reached or ‘counted’ for Medicaid purposes would be the income. Nevertheless, the trust can even provide that the income stream will be terminated in the event the client enters a nursing home. That will protect not only the principal but the income as well.