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A Medicaid professional consultant helping an elderly woman to protect her assets and money from the nursing home spend down.

Protect your Assets from Medicaid

Irrevocable trust for Medicaid asset protection from the spend down program and avoiding the 5 year look back period

The requirement of depleting assets in order to obtain Medicaid benefits for a nursing home relative is a growing concern. Many seniors are faced with this problem. The government requires you to spend down all of your assets before becoming eligible for Medicaid. This is devastating for those who are in a nursing home. Not only do they lose what they spent a lifetime working for, but their healthy spouse is also left with no resources.

Laws about Medicaid

In 2005, the Deficit Reduction Act established a deadline in which the Secretary of Health and Human Services had to release regulations for states to be in compliance with all new restrictions for Medicaid eligibility. The deadline was set for June 20, 2006.
Prior to the new regulations and restrictions, Medicaid had a look-back period of 3 years that time has now been extended to 5 years. The look-back period refers to a period of time in which transfers of assets are made. Basically, the law now states that no assets can be reallocated or repositioned for a period of five years prior to being placed in a nursing home. The government has laid down a law that says no person shall receive Medicaid coverage to pay for nursing home costs until their assets are completely spent down. The new laws now apply to all transfers of assets made after February 8, 2006. Any transfers after that point in time will have to fall under the five year period. Any transfers that were made before that time, the law will revert to the old three year requirement. If any state is not in compliance with these laws, the state will run the risk of losing federal funding.

Protect Your Assets

You are able to protect your assets. The key is to act quickly. The longer you wait the more chances you will take. It is important for seniors to understand the laws and realize that their assets are in jeopardy. Many seniors are now making use of a powerful legal tool known as an UltraTrust® irrevocable trust. The UltraTrust® irrevocable trust allows the senior to reposition their assets to an independent trustee. By independent, that means that the person cannot be related by blood or marriage. With the irrevocable trust, you will be giving up control of your assets. The trust will control the assets and will act in the best interest of the beneficiary. Many seniors cannot deal with this lack of control. It is very difficult for them to turn over the things they have worked so hard to obtain. While this may be a tough decision, it is one of the best options in order to protect those assets.

Revocable vs. Irrevocable Trust

A revocable trust is an agreement in which the owner of the assets performs a transfer of those assets to a trust. The transfer has strings attached. This means that it is a "grantor-type trust." A revocable trust has the owner of the assets declaring himself as the trustee, as well as the beneficiary of the trust. So, the trustee, beneficiary and grantor are all the same person. This type of trust will not work to protect your assets from the spend down requirement of Medicaid because you still own the assets.
The irrevocable trust is the way to go. This type of trust is when the owner of the assets completely gives up control of all of their assets. The assets are transferred to an independent trustee. That trustee will then use their best judgment to control the assets and act on the best interest of the beneficiary. The trustee is required to protect all of the assets. The trustee can never make any decision that will benefit him. This is the only way seniors can protect their assets. Though they have to give up ownership, they do not lose the assets to the government.
Asset protection is a serious issue for seniors. Since the government requires a spend down before Medicaid will help with nursing home costs, seniors are troubled with trying to figure out a way to protect what they have worked for. The UltraTrust® irrevocable trust is the answer.
For more information on the irrevocable trust, as well as other asset protection tools, visit:
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