Estate Planning Isn’t Just For The Elderly

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Trust resources and Medicaid eligibility

On Behalf of | Mar 24, 2023 | Medicaid Planning

It is crucial for those who wish to set up a trust to realize how their estate plan could impact any benefits that they currently receive or may be entitled to receive. For example, assets in some trusts could disqualify the beneficiary from receiving Medicaid. On the other hand, some types of trusts are exempt from one’s Medicaid eligibility. It is important to realize that revocable and irrevocable trusts are treated differently.

Understanding how various types of trusts can affect one’s eligibility for Medicaid and other government programs is an essential first step for anyone who currently receives Medicaid or plans on applying for these benefits in the future.

Revocable trusts, irrevocable trusts and Medicaid

New York’s Department of Health states that since 2000, those who use a revocable trust to hold their assets could lose Medicaid eligibility since the assets count as a resource. With revocable trusts, the entire value of the trust counts as a resource for the grantor/creator. For irrevocable trusts, a part of the trust’s assets could count as a resource for Medicaid eligibility if the grantor or beneficiary can receive payments from the trust.

Special needs trusts, pooled trusts and Medicaid

When it comes to trusts and Medicaid eligibility, the value of assets in some trusts is exempt. For example, those who set up a special needs trust, also known as a supplemental needs trust, do not have to worry about this trust interfering with their Medicaid eligibility. In addition, pooled asset trusts do not affect one’s ability to receive Medicaid benefits either.

Those who decide to create and fund a trust should have a comprehensive understanding of how their estate plan could affect benefits they and/or their loved ones rely on, such as Medicaid, as well as other facets of their lives.