The use of Medicaid trust Queens in estate planning raises a number of questions. Two very important questions thus raised are how will the transfer of asset into the trust be treated; and how will the trust assets and income from the trust be treated when you apply for Medicaid benefits?
To fully understand and answer these questions, certain distinctions must first be clarified. Firstly, it has to be known if the trust is a third-party trust where the assets thus transferred into the trust do not belong to the beneficiary of the trust, or whether it’s a self-settled trust where the trust assets belong to the beneficiary/settlor. It also has to be asserted if the trust is a Medicaid trust where the trustee has no personal choice to use trust funds for the beneficiary, or is it a Supplementary Needs Trust (or an exception trust).
Asset Rules and Trusts for Medicaid Transfers
The first question raised is concerned with the transfer of a person’s assets into a trust and how this affects his eligibility for Medicaid benefits. Transfer into and from trusts are subject to a 5 year lookback period and thus results in a penalty period of ineligibility for institutional care (such as nursing home care, waivered programs, etc.). What constitutes a person’s ownership of assets was clarified in 1993 by Congress and it includes any income or resources of the individual or their spouse, as well as those which they are entitled to but do not receive due to a court ruling or actions of another person acting on behalf of the individual.
Benefits of having a Medicaid Trust
The primary benefit of having a Medicaid trust is it allows you to transfer your assets into a trust and management by somebody else, while still maintaining some level of control. You give instructions on what you want done with your trust asset and as such, your instructions would be such that you are indirectly benefited even though you cannot directly get the principal of the asset. Also, it allows you to name beneficiaries who your trust assets will go to even while you’re alive or when you die. In Queens, the N.Y trustee laws bind your trustee to carry out your trust instructions by all means, therefore you have utmost protection for yourself and your assets. Also, by reason of being irrevocable, the Medicaid trust Queens can only be revoked when all the trustees have agreed to disengage from the trust.
Another great benefit is the Medicaid trust gives you eligibility to enjoy Medicaid benefits. A Medicaid trust Queens is the right choice for you if you want to get Medicaid and are willing to do without those trade-offs.
In addition to Medicaid eligibility, there are other benefits which come with the Medicaid trust. Setting up the trust helps you qualify for Supplementary Security Income (SSI), food stamps, and section 8 benefits (Housing Choice Voucher Program). It is worthy of note that since each of these programs have their own requirement, you should consider them while setting up your Medicaid trust.
Downsides to setting up a Medicaid Trust
You should know that whatever asset you place in your Medicaid trust, you are giving up control of such asset to a large extent. You are not permitted by law to touch the principal (for instance you place a bank account of yours in a trust, you cannot withdraw from that account). Nevertheless, you are entitled to the profits or income earned from such assets.
Again, if your income is above the Medicaid threshold, you would not be eligible for Medicaid trust, but would be required to spend your excess income first, or otherwise go into a Pooled Income trust. Pooled trusts are managed by non-profit organizations who pay your personal and medical bills for you while collecting 8.5% as fees.
There are three kinds of Medicaid viz: Regular, Home care, and Nursing home Medicaids. You can qualify for the first two immediately the trust is created, but it will take another 5-years — called a lookback period — to qualify for Nursing home Medicaid. If you try to obtain the nursing home Medicaid before the 5 years elapse, you’ll be served with a one month disqualification period for each $11,500 which you transfer into the trust. Consequently, this tells you that having a Medicaid trust is best suited for people who look to do without a nursing home.
