There are many concerns that need to be addressed in life, including paying for future health care. Though trusts may often be associated with wealthy individuals, these tools can also be used for those who wish to preserve an estate while still qualifying for assistance from Medicaid. Arizona residents who are worried about providing for their heirs and still receiving elder care may benefit from irrevocable trusts.
Paying for nursing or assisted living care is costly -- especially when there are limited resources. In an effort to protect some assets, people may choose to transfer assets to their heirs through gifts. The Medicaid program requires that a five-year period elapse from the time of asset transfer to the time an individual will qualify for benefits. Unfortunately, transferring assets in this manner will not protect them from a beneficiary's creditors or divorce actions.
One tool that can protect assets is an irrevocable trust. This planning tool still requires the five-year period before an individual can apply for benefits through the Medicaid program. However, a trust allows an individual to transfer ownership of assets to the trust while appointing a trusted individual to over see the assets in the manner prescribed by the instructions. The former owner may elect to retain lifetime interest in income from the trust in a manner that would not interfere with Medicaid benefits.
These trusts cannot be revoked, and assets owned by the trust cannot be subjected to Medicaid recovery attempts. Furthermore, the use of such trusts avoids the probate process. Every trust has specific rules that must be followed in order to take advantage to the benefits the trust offers. Arizona residents who are contemplating engaging in estate planning while also seeking ways to obtain elder care in the future may consult with an experienced attorney who can help draft plans that will best meet their current and future needs.