Though it can be unpleasant to think about, taking the time to plan for the future is critical. Unfortunately, many assume that they don’t need to start until they get older, but by then, you may find yourself unable to get the care you need, especially in terms of nursing homes and other long-term care facilities, due to the high costs. As such, knowing when to start planning and the tools you can utilize to help protect your future is critical. The following blog explores what you should know about using a trust fund to help avoid nursing home costs, and the importance of working with St. Louis wills & trusts lawyers to guide you through these complicated matters.
How Can a Trust Be Used to Circumvent Nursing Home Costs?
When you are considering long-term care options like nursing homes, the costs can be astronomical. Unfortunately, many people are unable to afford the costs, even with insurance. As such, you may wonder what your options are.
Generally, Medicaid will cover the cost of care in facilities for those who are eligible, which requires you to have less than $2,000 in liquid assets. This is because Medicaid, unlike Medicare, is a need-based program. It is possible, however, to spend down your assets so that you may qualify for this care through gifting assets.
You may find that simply giving assets and property away is not a viable option, as you may incur a hefty gift tax or you have concerns regarding the financial maturity of those to whom you would gift the assets. As such, you may want to consider creating a trust fund.
When you create an irrevocable trust fund, you will essentially move assets from your estate into that of the trust. As such, you will no longer retain control over the assets; instead, they will be considered the property of the trust fund, meaning they’re not considered part of your estate, helping you to qualify for Medicaid to cover the cost of nursing homes. It is critical to note that this must be an irrevocable trust. If you create a revocable trust, the assets held in the fund will still count towards you, as they remain under your control.
When Should I Start Planning?
If you want to utilize a trust fund to qualify for Medicaid, it’s critical to understand the importance of starting to plan early. Medicaid has a five-year lookback period in which the assets transferred during this time will still continue to count towards your assets. As such, you’ll want to begin planning as soon as possible to ensure you are prepared for this process.
When you are ready to begin planning for your future, doing so under the guidance of an experienced attorney with the Stobie Family Law Group is critical. Our team can walk you through this process to help ensure you understand your options so you can feel confident in the decisions made for your future. If you’re ready to begin, contact us today to learn how we can assist you.
