How Can I Use a Trust to Protect my Money from Going to a Nursing Home?

 In Long-Term Care Planning

Question:

How do I go about setting up a trust that will protect my money from going to a Nursing Home instead of my daughter?

Response:

That is a big question and I’ll start by referring you to this post. But, here are the basic rules, which involve protecting assets from having to be spent down to qualify for Medicaid coverage of nursing home care:

  1. The trust must be irrevocable.
  2. You may not have access to the trust principal.
  3. You may receive income earned by the trust investments.
  4. You should not serve as trustee (this can depend upon other trust terms and your state’s treatment of these trusts).
  5. You will be ineligible for Medicaid benefits for the five years after you last transfer assets into the trust.

There are also myriad tax implications to drafting the trust. But the biggest issue is balancing your need to provide for your future and your wish to leave assets to your daughter. The act of protecting them means that they won’t have to be spent for your nursing home care, but it also means that they’re unavailable for your needs, whether to travel and enjoy your life or to pay for care you may need to stay at home rather than move to a nursing home.

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