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Why Estate Planning and Medicaid Planning Take Different Paths

Clients frequently ask “Doesn’t my revocable trust protect my assets if I get sick and require long term care services?”  Clients are surprised when the answer is that their revocable trust assets, which they control, are countable if the client has a chronic illness and wants to apply for Medicaid.

Clients want to stay in control of their assets during their lifetime.

The primary goal of estate planning is to facilitate the client passing on their assets, at death, to their designated beneficiaries and avoid probate.

Sometimes, when clients create their estate plan, they are not considering the possibility that they may be diagnosed with an illness in the future. If a revocable trust is created, the client manages and controls the trust as if the client and the trust are one.  This is why the Medicaid rules consider revocable trust assets as available resources when determining if a person meets the financial eligibility requirements.

Alternatively, when a client wants to qualify for Medicaid or other government assistance, the goal is to maximize the assets that can be kept in the client’s name and to place other assets out of the client’s control  and ownership  This is a very different goal than estate planning.

Depending on the facts of your specific situation it may be possible to create a plan that can achieve your goals of estate planning and long term care planning. To determine the best possible course of action, w e would take into account:

  • the client’s age
  • marital status
  • type of assets
  • amount of assets that are over the resource limit
  • family dynamics

Be proactive to active your goals.

  1. Contact me as soon as you have a concern about your health and the possible need for long term care.
  2. Allow me to create a Durable Power of Attorney for you that will allow trusted people to implement a plan to preserve assets on your behalf.

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