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The Benefits of a Medicaid Trust

The Law Offices of Steven H. Peck, Ltd. Aug. 3, 2023

In Illinois and across the United States, individuals with limited resources and income can take advantage of Medicaid health insurance programs. There are various factors considered to be eligible for Medicaid long-term care benefits, such as the person's income, age, residency status, and asset value. 

Generally, having significant income and assets might affect your chances of meeting the asset limit for Medicaid. However, by transferring some of your assets and property into a trust, you can safely keep away the assets and eventually qualify for the Medicaid program.  

Attorney Steven H. Peck can determine if you are eligible, and if you're not, he will guide you in all Medicaid trust-related matters. As an experienced estate planning attorney, Steven can tell you about the benefits of Medicaid trust, how it works, and determine whether it is right for you. The firm proudly serves clients across Cook County & Lake County, as well as McHenry and DuPage Counties, Illinois. 

What Is a Medicaid Trust?

Medicaid Trust – commonly referred to as Medicaid Asset Protection Trust (MAPT) – can be described as an irrevocable trust that can be used to safeguard assets and allow a person to become eligible for Medicaid long-term care benefits.  

The main purpose of Medicaid Trusts is to allow individuals with significant assets to qualify for Medicaid benefits and receive long-term care. Hence, all the property put into the Medicaid Asset Protection Trust will be excluded from their assets when applying for the Medicaid program. 

Medicaid Trust Assets

Here are some assets that may be placed into a Medicaid Asset Protection Trust: 

  • motor vehicles 

  • your primary home or residence

  • money

  • personal property, such as jewelry, family heirlooms, and other valuables 

  • some life insurance policies 

  • qualified retirement accounts, including a 401(k) or IRA

A trusted attorney can help identify assets and property to place into your Medicaid Trust and help create your trust as soon as possible. 

When to Create Medicaid Trust

However, to become eligible for Medicaid long-term care benefits – and keep away your assets – you must establish the Medicaid Trust within:  

  • two-and-half (2.5) years before needing home care Medicaid, or  

  • five (5) years before needing nursing home care.  

An experienced Illinois Medicaid planning attorney can assess your situation, help you understand how Medicaid Trust works, and walk you through the procedures involved in creating one. 

How Do They Work?

Medicaid Trusts are irrevocable trusts that cannot be altered, revoked, or modified by the trustor. Once created, the trustor relinquishes control over the trust property – all assets and funds placed in the trust. As a result, the trustor will choose someone – other than their partner or themselves – as the trustee.  

Additionally, the trust assets are protected from lawsuits and debt collection against the grantor. Following the mandatory look-back period, the trust property will pass to the beneficiaries. Hence, the trust property will be protected from Medicaid. Though, you can still replace or remove the trustee. 

What Are the Benefits of a Medicaid Trust?

Here are some benefits of creating a Medicaid trust:  

  • It allows you to attain the asset limit and become eligible for Medicaid.  

  • It allows you to store away assets for beneficiaries until a future date.  

  • It protects you from the tax ramifications of selling off your property.  

  • With a Medicaid Trust, you don't need to pay for a nursing home or assisted living using personal finances or property.  

  • Trust property and income generated by trust assets will be available to beneficiaries.  

  • Medicaid Trusts can help bypass the lengthy probate process.  

  • Beneficiaries will receive trust property upon the trustor's death or sudden incapacitation.  

A dedicated Illinois trust attorney can help establish your Medicaid Trust, fund the trust, and help you navigate crucial decisions. 

Comprehensive Estate Planning Counsel

Long-term care is usually expensive and can have significant financial implications on your assets and income. Among the possible options to cover the cost include applying for a Medicaid health insurance program. However, qualifying for Medicaid requires meeting the asset limit. A good way to achieve this is by storing away some of your assets and money in a Medicaid trust.  

The attorney at The Law Offices of Steven H. Peck, Ltd. can help you through the challenging procedures involved in creating Medicaid trusts. Attorney Steven H. Peck will analyze your legal options and determine whether a Medicaid trust is right for you. In addition, Steven will help establish the trust, safeguard your accumulated assets, and ensure your eligibility for Medicaid long-term care benefits.  

Contact The Law Offices of Steven H. Peck, Ltd. today to arrange a consultation with an experienced estate planning lawyer. Attorney Steven H. Peck offers reliable legal counsel and knowledgeable advocacy you need to make informed decisions about your long-term care. The firm proudly serves clients across Cook County & Lake County, as well as McHenry and DuPage Counties, Illinois.