However, amendments the Texas Legislature made to the spendthrift statute in 2013 may have created a back door to creating a self-settled asset protection trust. Asset protection trusts include irrevocable trusts with spendthrift provisions, offshore trusts, and domestic asset protection trusts available in some states (other than Florida). See . You are correct. Although there are numerous ways to protect your home from the claim of the state Medicaid agency (Health and Human Services Commission) if you receive Medicaid assistance (most typically for care at home or in a nursing home … With this type of irrevocable trust, you could draw income from the The state of residency of the trust beneficiaries has a “penalty divisor” of $5,000, meaning there is a one month penalty period for every $5,000 of gift value. This way the home stays out of probate which is often where the government goes to look for any assets to recover from the Medicaid benefits that were paid out. You keep complete control over the property during your lifetime. The penalty period will begin to … This special needs trust must be irrevocable in order to qualify, since Medicaid ignores revocable trusts. The Austin Texas Estate Planning Law Firm of Brad Wiewel, writes about issues relating to Estate Planning, Asset Protection Planning, Probate and Trust Administration, Special Needs Planning, Business Succession, Estate Tax Planning, Charitable Planning, and Pet Planning. Programs such as Medicaid can help pay for long term care, but your home or other assets could be at risk. As its name suggests, an asset protection trust is designed to protect one’s wealth. Medicaid is also used by individuals who have taken steps to protect their assets using trusts or other estate planning tools. Timing is also an important factor in using this technique. Since Medicaid is a need-based program, there is a $2000 limit on countable assets You could convey assets into an irrevocable Medicaid trust before you apply for coverage. However, public benefits laws, particularly Medicaid, are in a constant state of flux. It is vital that […] Benefit or Backfire: Navigating the Irrevocable Medicaid Trust 9 8 —until recently. Five years of nursing home care can easily cost between $400,000 and $500,000. Any estate or asset protection plan must be based on current federal and state law. Qualified Personal Residence Trust (QPRT) The first tip off that someone is not an asset protection planner is the suggestion that the best way to asset protect a residence is through a QPRT. ASSET PROTECTION TRUST | Dallas Elder Law. QPRT – Asset Protection Society. DRAFTING IRREVOCABLE MEDICAID TRUSTS Irrevocable Medicaid Trusts are a valuable tool in the estate and elder law planning arsenal. ASSET PROTECTION THROUGH MEDICAID PLANNING FOR LONG-TERM CARE IN TEXAS Michael B. Cohen, Attorney at Law 12201 Merit Drive, Ste. In the event the trust is terminated prior to the death of the Grantor, all assets remaining in the trust shall be paid to the United States Department of Medicaid up to the amount of the total of all Medicaid assistance paid by Medicaid on … This prevents there being any kind of a legally recognized property transfer. 14 May LADYBIRD DEED VS. ASSET PROTECTION TRUST FOR PROTECTION OF HOMESTEAD. Working with a Ft. Worth Texas will and trust attorney will allow you to properly structure the trust so it can be avoided in asset … A Medicaid-qualifying trust is one that was established between June 1, 1986, and Aug. 10, 1993. Medicaid-Planning Strategy #1: Asset Protection Trusts. 5  Assets in an irrevocable trust are not owned in your name, and therefore, are not part of the probated estate. It consists of an irrevocable trust, usually set up by a parent of parents sixty-five and older. It holds the assets of the future nursing home patient. This is certainly language that should not be placed in your Medicaid Irrevocable trust if you want to add certainty to the protection of your assets. This strategy, however, has consequences. An irrevocable trust may help with long-term care, particularly with regards to Medicaid benefits. To receive Medicaid benefits, a person must comply with Medicaid's narrow eligibility requisites for assets and income. The result is that many individuals have too many assets to be eligible for Medicaid benefits. A Medicaid-qualifying trust (MQT) is one that the person, his spouse, guardian or anyone holding his power of attorney establishes using the person's money. Yes and no. This means the assets are safe from Medicaid estate recovery. In 2013, the Texas legislature revised section 112.035 of the Texas Trust Code (the spendthrift trust statute) to add significant exceptions to the prohibition against spendthrift protection for self-settled trusts. A Medicaid Asset Protection Trust (MAPT) may represent the best way in North Carolina to protect those assets that you want to share with your children and grandchildren. When properly drafted and administered, these trusts protect the assets while permitting the beneficiary to obtain and maintain qualification for public benefits. Changes in the law may affect your estate or asset protection plan. When she funds an irrevocable trust, it will be a transfer for Medicaid purposes and will be reviewed for a transfer sanction if she applies for Medicaid within 5 … If you’ve contributed to Social Security long enough, you get the benefits. However, after the disabled person dies, the trust must reimburse the state for any excess funds spent on behalf of the Medicaid recipient. The cost of setting up a Medicaid trust depends on its terms, other planning and the number, value and nature of assets being protected. An irrevocable trust was the way to go. An irrevocable trust will help you avoid giving away or spending down the value of your assets in order to qualify for Medicaid. The attorney points out that when implementing Medicaid asset protection planning, the rules are less restrictive: • You’re able to choose or remove your trustee • You’re able to change your mind at any time about your beneficiaries • You can select whether the trust income is taxable to you or your beneficiaries The assets in a Medicaid asset protection trust not only allow one to meet Medicaid’s asset limit without “spending down” assets, but the assets are also protected for the beneficiaries listed by the trustee. Typically, we think of creating an asset protection trust when someone is planning to apply for Medicaid. Spendthrift Protection for Trust Property Appointed Back to Settlor. by Michael Ettinger, Attorney at Law The Medicaid Asset Protection Trust (MAPT) is a technique commonly used by elder law attorneys. But, if designed correctly, this legal tool can serve other purposes as well. Attorney Sandy Ard, of the Ard Law Firm, PLLC, provides clients with comprehensive Estate Planning, Medicaid Planning, Veterans Benefits Planning, Wills, Trusts, Living Trusts, Pet Trusts, Special Needs Planning, Asset Protection, Elder Law, Farm Trusts and Non-citizen Spouse Estate Planning, Probate & Estate Administration, Business Succession, and Family Business Planning, in Houston, Texas and … Medicaid Asset Protection Trust (MAPT) 2 years ago by Elder Options of Texas Medicare / Medicaid Click Here to Find a Texas Medicaid Planning Specialist: Medicaid Asset Protection Trusts (MAPT) can be a valuable planning strategy to meet Medicaid’s asset limit when an applicant has excess assets. I have been asked from time to time whether an asset protection trust will protect assets from being considered in an application for Medicaid eligibility. This is known as the “home-in-and-out” of a revocable trust. A Medicaid asset protection trust allows an applicant to meet these eligibility requirements by reducing the value of his or her assets. A better strategy is to gift the assets to a trust. Section 112.035 (d)(2) of the Texas Property Code summarizes the general rule that asset protection does not apply to the settlor if he is the beneficiary of a trust he … Tanya may also help you protect your assets by advising you how to legally “spend down” your assets. A Medicaid Asset Protection Trust (MAPT) can be a valuable planning strategy to meet Medicaid's asset limit when an applicant has excess assets. An irrevocable trust can protect your assets against Medicaid estate recovery. Nursing home Medicaid asset protection is the process of using proven and legal strategies to avoid paying more for nursing home care than your parent or spouse legally has to. The Shea Law Firm’s Texas Medicaid Deed offers you the benefit of protecting your home from the Texas Medicaid Estate Recovery claim while avoiding the complications that can arise with transfer of the property through either a life estate deed or outright transfer. This type of trust is distinct from other irrevocable trusts in that the creator of the trust cannot have access to the principal of the trust. The asset trust is called Medicaid Asset Protection Trust, and the income trust is called the Pooled Trust, or Community Spend-down Trust (because it helps you avoid the Medicaid spend down). Long term care costs are high and constantly rising. This type of trust cannot be changed unless the grantor and the beneficiary agree to the change. A qualified income trust in Texas helps people qualify for Medicaid but it doesn’t shelter income. Money deposited into trust bank account typically flows out of the trust to pay the nursing home. It’s designed to cover part of the care costs. Transfer-on-death deeds, lady bird deeds, and traditional life estate deeds can all transfer real estate at a person’s death while retaining a right to use the property during the person’s life. An asset protection trust can be used to start the clock for Medicaid. The reason is Medicare is an entitlement. The drawback to securing asset protection in this manner is that you no longer own the assets and may not have access or control of their investment or use. impossible to create an “asset protection” trust under Texas law. The program names may sound alike but the programs are different. wide-ranging, jointly funded state and federal health care program for low-income individuals of all ages. Cohen, supra. Any assets that are placed in an asset protection trust will be 100% protected from Medicaid when the assets have been in the trust for five years. While a family trust may be used to protect assets from Medicaid, this can only be done in the case of an irrevocable family trust. The person is the beneficiary of a Medicaid-qualifying trust. Your Medicaid Trust must have an a trustee, which can be your … Texas Deeds and Medicaid Asset Protection Several types of deeds are used in Texas for estate planning purposes. Medicaid's Treatment of Testamentary Trusts By Donald D. Vanarelli, Esq. A Medicaid Asset Protection Trust is a device that can be used for many purposes including, most importantly, the protection of assets if and when the creator of the trust needs to apply for Medicaid. The Trust hereby established may be terminated by the Grantor at any time and shall terminate on the death of the Grantor and final disbursement of all remaining assets. There is a type of Medicaid trust called an income only trust. We will help you develop a plan to protect your home and life savings in the event you or a loved … You must have a properly worded trust. Because we are a Texas comprehensive estate planning law firm in Austin, we can sometimes use asset protection devices like a Medicaid Asset Protection Trust to protect our clients’ valuable assets even if you need nursing home care. In an effort to preserve some assets, families consider many different options. We are not personally fans of a QPRT for most clients; and as it is discussed below, you will see why. An Asset Preservation Trust is a special trust we use in Asset Preservation Planning to protect assets that could be lost to the financially devastating costs of long-term care. It is used when a person has not purchased long-term health care insurance or does not have enough money to pay for long-term care out of their own funds. Trusts and the 5-Year Look Back Period. A Medicaid Asset Protection Trust is a device that can be used for many purposes including, most importantly, the protection of assets if and when the creator of the trust needs to apply for Medicaid. A typical Medicaid trust … If your nursing home bill right now is $5,000 but your parent's income is only $750 your parent's life savings is going to disappear real quick while the nursing home laughs all the way to the bank. Also, just as importantly, a Lady Bird Deed is completely revocable. of the trust can be paid out to you. In this particular case the revocable trust has ZERO asset protection value. The main “Medicare asset protection” strategy is to qualify for a Medicaid program once those 100 days are up. Our firm is here to assist individuals and families in their estate planning needs, whether it be preparation of a Medicaid application to obtain government assistance in care cost, a QIT, Special Needs Trust, Asset Protection, other trusts, or simply saving the homestead from the Medicaid Estate Recovery Program. This trust is designed to protect assets from being counted for Medicaid eligibility. 230 Dallas, Texas 75251 (214) 720-0102 Toll Free (800) 619-1587 Fax: (214) 754-0936 www.dallaselderlawyer.com This booklet is for you: • You don’t have adequate long-term care Because the assets you place in the irrevocable trust technically aren’t yours anymore, you’ll need to name a primary beneficiary as well as establish a reliable power of attorney for future needs that arise. Special Needs Trust: Medicaid allows transfers of assets to a Special Needs Trust for disabled individuals who are under the age of 65. According to the American Council on Aging , “adult children and other relatives can be named as trustees,” but they must follow rules that prohibit them from using trust … Medicaid helps pay the costs of long-term care for aging seniors. This would completely decimate the life savings of most Texans. Yes, you can certainly move all of your loved one’s assets into an irrevocable trust in order to meet the $2,000 asset limit and then apply for Medicaid. In this scenario, let’s assume the penalty period is 40 months, calculated as $200,000 / $5,000 = 40. It is useful for married persons having an estate with a countable asset value (in 2015) somewhere between $23,844 and $238,440. More troubling, trusts drafted under prior law that included triggering language were not grandfathered once the updated law was passed. A Medicaid Trust, sometimes erroneously called a Medicare Trust, is an irrevocable trust.