Will Medicaid Pay For Home Repairs For A House In A Trust

Dad died 5 years ago and there is a trust under his will for Mom. Volition the trust be countable if Mom goes into a nursing home?

Mom and Dad fix an irrevocable trust years ago (Neb Clinton was on his first term) and put state and another assets in the trust. Are the avails in the trust safe?

Dad has a revocable trust (although the front page says it is a "living trust") he set-up several years ago. How volition Medicaid treat that trust?

Go Your Head Effectually the Rules

To understand how Medicaid treats trusts, retrieve that Medicaid has three types of rules that apply to trusts (and many other avails). If you lot really want to read well-nigh those rules, you tin on this website. Also, this discussion does not accost special needs trusts, which are more often than not a whole other thing. Merely in a nutshell here they are:

Medicaid has rules regarding what avails will exist counted for purposes of determining whether someone volition qualify for Medicaid. Some trusts will count; others won't.
If an asset does not count, just the bidder or her spouse in one case endemic that asset (that is, they transferred the asset out of their names), Medicaid has rules that will "punish" the applicant for transferring or releasing championship to the asset.
If the asset is under the limit for qualifying for Medicaid or is not counted by Medicaid for eligibility purposes, the nugget may nevertheless be available for estate recovery when the applicant dies.

Let'due south take each of these general Medicaid rules and apply them to trusts.

How Does Medicaid Count Trusts?

Information technology depends upon 2 things. Whether the trust is revocable or irrevocable, and whether the trust was prepare-up by the applicant or his spouse.

Revocable Trusts

Mesh beach bag If a trust is something like a bag to store assets in, then retrieve of a revocable trust as a nylon mesh beach handbag. Medicaid can run across everything in it, and if assets are otherwise countable the trust doesn't make whatsoever divergence. That is (heh, heh) "plain to see."

That is why most living trusts don't exercise a thing for asset protection (although I do occasionally use them in advanced asset protection planning strategies).

Irrevocable Trusts

If the trust is irrevocable, things are a flake more than complicated. Think of a blackness canvas bag with locks and black-canvas-tote-bag buckles on it.

If either the applicant or his spouse set up the trust and there is whatever way (I mean Whatsoever WAY) that any portion of the trust could be distributed to the applicant, Medicaid will count that trust portion. For example, if an irrevocable trust says that a trustee can distribute any amounts in the trust to Mom or Dad if he is in a good mood and it snows in July Medicaid will count the whole trust.

If Mom or Dad set up the trust up and it says to distribute the income to Mom or Dad, only never to distribute primary to Mom or Dad (well . . . maybe the trustee could distribute principal to other people, simply not Mom and Dad), Medicaid will count the income . . . merely non the principal.

If the trust is irrevocable and someone other than Mom or Dad set-upwards the trust and put avails in the trust, Medicaid will count the trust just to the extent that the trustee MUST make a distribution to Mom or Dad. I said "MUST" . . . the trustee MAY be able to brand a distribution and it won't crusade any Medicaid bug.

To recap: If Mom and Dad set up upwardly an irrevocable trust and there is any conceivable way, no matter how far-fetched, that the trustee can brand a distribution: Potential Medicaid Unhappiness. If someone else set upwardly the trust and put their assets in, and if the trustee has no legal requirement to make a distribution to Mom or Dad: Medicaid Happiness.

Trash the Rules If a Trust Under a Volition is Involved

I lied. A little. The rules in a higher place do Not apply if either Mom or Dad set up a trust nether his or her will and his or her assets flowed into that trust. The trustee COULD make a distribution to either Mom or Dad (whichever one of them is left live) and Medicaid will non count the trust. Medicaid will count the trust only to the extent that the trustee MUST make a distribution.

In other words, a trust under either Mom's or Dad'due south last will and testament is treated the same every bit a trust set up up by some other person.

You want to know why? So exercise I. If you figure it out send me an electronic mail.

How Does Medicaid Treat Transfers Into a Trust?

Easy question. If the assets in the trust are countable, there is no Medicaid transfer penalty. If the avails in the trust are Non countable nether the rules to a higher place, there is a Medicaid transfer penalty.

Remember, the transfer penalty is "punishment" for transferring the assets out of your name, to a identify where they cannot be counted, and and then applying for Medicaid within five years of the transfer.

One time Again, What About Wills?

There is no transfer penalization if a transfer accomplished by will (including a transfer into a trust nether a volition).

What About Estate and Recovery and Trusts?

Another piece of cake question. If an asset does not count considering information technology was non available to the applicant at his option, then it certainly will not be available for estate recovery when the applicant dies.

This part really does make sense. Assets in a revocable trust will be wholly available for manor recovery the aforementioned equally if there was no trust. Assets in an irrevocable trust will be bachelor for estate recovery only to the extent the trustee is required to distribute the assets back to the manor of the deceased bidder or to pay his outstanding claims.

For some strange reason I never drafted an irrevocable trust that way (you may now chuckle).