The U.S. Department of Health and Human Services reports that over half of all adults over 65 will need long-term care after a significant medical issue. Florida adults need to plan ahead for this possibility. A Tampa Trust Attorney from Mortellaro Law can help you better understand how to use trusts to prepare for long-term care.
What Is a Trust?
Trusts are financial estate planning tools that can protect assets, but not all trusts are the same. Irrevocable trusts offer robust asset protection, while revocable trusts primarily provide probate avoidance. They are not just for the incredibly wealthy or those at a higher risk of being sued; they can help fund long-term care and help you qualify for other long-term care benefits, like Medicaid. Trusts are simple in concept but can be complex in operation.
- A grantor funds the trust with assets.
- A trustee (or trustees) controls how the trust is managed.
- Beneficiaries benefit in different ways from the trust assets.
The trust becomes a separate legal entity from the grantor, so anything belonging to it is protected if someone comes after the grantor or the beneficiaries. In the event of a lawsuit, the investments, real estate, or other assets in the trust cannot be touched. This is a very simple explanation, and a Tampa Trust Attorney can explain more.
Trusts and Long-Term Care Planning
Both revocable and irrevocable trusts can be used for long-term planning purposes. Revocable trusts can be changed, but irrevocable trusts cannot.
Revocable trusts are excellent asset management tools for avoiding probate and providing some protection against financial exploitation, but they do not offer the same level of asset protection as irrevocable trusts.
Irrevocable trusts are also great for long-term care planning. They are often called Medicaid Trusts because they shelter assets, so they are not considered toward the strict Medicaid income and asset limitations. Also, assets in the trust are not subject to any estate recovery efforts by Medicaid.
Establish a Medicaid Trust and Avoid the Look-Back Period
The Medicaid look-back period is a five-year period of time during which Medicaid reviews an applicant’s financial transactions to determine if any assets were transferred for less than fair market value. This prevents people from giving away assets to qualify for Medicaid benefits. If such transfers are found, penalties may be assessed, and eligibility for Medicaid benefits may be delayed.
Advance long-term care planning with a Tampa Trust Attorney can secure assets in an irrevocable Medicaid Trust in plenty of time to escape the look-back period. Your assets are protected and are not considered in Medicaid asset calculations.
Are Medicaid Trusts Legal and Ethical?
Medicaid asset protection trusts are perfectly legitimate and legal. After all, you’ve worked hard all your life to build a legacy while paying volumes of federal and state taxes; why surrender everything you’ve worked for to enjoy this government benefit? Florida law allows you to protect your assets and still enjoy government benefits for long-term medical care if the need arises.
Contact Mortellaro Law today for a free consultation about your Medicaid eligibility and advance planning. We can also help you if you or your spouse are in crisis mode and entering long-term care. Call or message us online today for assistance.
