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Can estate trusts be created within the five year lookup regarding Medicaid?

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What state are you in?
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I am interested in this too. I am in the state of NJ/ In laws are in Maryland.
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If an individual gives away money or property during the five-year look-back, it triggers a penalty period during which he or she is ineligible for government aid.


The penalty period equals the amount given away divided by the average cost of nursing-home care in your area. So, for example, if you give $60,000 to family members and a nursing home costs $6,000 a month where you live, you can't qualify for Medicaid for ten months.
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My parents have had a trust for several years. Unfortunately, they also recently added $$ to the trust; those $$ will not be protected for 5 years from the date they were added to the Trust.

Since I provide 50 - 60 hours of care giving services / month. According to our elder law attorney, as long as I document what I am doing (services provided) and the amount of time / mileage can be taken from the non-protected dollars and draw down the dollars that will count against them if / when they need nursing home services.

We are also trying to get it setup as a 'gift' to me rather than payment for services rendered. If it is a gift, I don't have to pay taxes as long as it is within the specific gifting $$ amount / year.

If I were not providing the services, my parents would have to hire someone for the services I provide. Therefore it is an allowable expense within that 5-year look back.
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To spaulding: There is no reduction in penalty for gifts under a certain amount. That is a federal gift tax law (currently $14,000 per donee per year). Medicaid will tally up ALL gifts made within the five-year period before the date of application to figure out the penalty period.
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Regarding trusts, note that only an irrevocable trust--not a revocable "living" trust--can possibly offer protection from Medicaid countability, and then only if it is drafted correctly. In some states, for example, it is possible to retain the right to income while in other states that will cause the entire trust to be counted, defeating the purpose of setting it up in the first place.

It is not the date the trust is created that counts but the date when money is transferred into the name of the trust. All such transfers within the 5-year period before application will count toward the penalty period.
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What happens if you have a parent who is NOT on Medicaid and they have a trust with say $100,000 in it but repairs need to be made to their home caused by termites and just plain old age and deterioration. If that money is spent on repairs to the parents home and then a time should come when that parent needs financial help for Medical problems and you should have to turn to Medicaid. Do they look back and say you had $100,000 and you used $75,000 up to make your home livable again, so we are not going to allow you to go on Medicaid for X number of months?
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If $100,000 is transferred to an irrevocable trust and the parents have no access to the principal, then 5 years from the date of transfer that transfer will not cause a penalty period when one of the parents applies for Medicaid. If the trust allows for repairs to a house not in the trust but owned by the parents, then the entire trust would be deemed countable for Medicaid purposes. A better way to handle this would be to transfer the house into the trust, too. Then after 5 years the house is exempt AND avoids estate recovery. Also, should the house need repairs, the cash in the trust can safely be used for that purpose without it being deemed a gift back to the parents.
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Attorney Heiser, the trust is a revokable trust not irrevocable and was done in 1990's and the house was transferred into the trust at that time as was all their money. How does that change the outcome? We also want to take money and go pre-pay for her burial, will that cause a problem?
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All the assets in a revocable trust are countable--not exempt--for Medicaid eligibility purposes, including the house. So in order to avoid having the house as a countable asset, you will need to deed it back out of the revocable trust (there may be one or two states that still exempt the house inside a revocable trust).
Because all the assets in a revocable ("living") trust are countable, transfers into such a trust do not incur a penalty.
Spending down excess assets by pre-paying funeral and burial funds is an excellent idea and will not cause a problem so long as the total expenditure is within your state's limits under the Medicaid program (various states have different maximum amounts for such pre-payment funds).
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Hi Wyndie, this is how it was explained to me in Calif. Anything spent for my mom's benefit and ownership is not an issue. We could repair her home, make improvements to it, repair & maintain her car even if she didn't drive as long as we were transporting her to doc appts, taking her places, shopping with or for her, buying her clothing, dry cleaning, food, supplies, HER meals out at a restaurant. You get the idea? Her money can't be given to you or grandchildren or anyone in large OR small lump sums, can't be used to buy anybody christmas or birthday gifts, can't pay for anybody else's meal out even if you accompany her, can't be used to buy a car in YOUR name even if you only use it on her behalf, etc. etc. You could take your mom on a round the world 3-month cruise and pay HER $23,595 fare but you must pay yourself for you or your family to go with her.
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What about the surviving spouse? We are spending down toward medicaid now. my husband (71) has AD. I am afraid to even have a deck repaired or a room painted less I be penalized later on! I am full-time teacher. Does the money I earn get counted as "the couples" money? It is always so different if the person with the disease is your spouse, not your parent.
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Omg...you are NOT the "surviving spouse" at thus point b/c ur husb is alive. You are the "well spouse".Please do not b spending down one more cent w/o consulting an elder care atty. There r legal ways for the well spouse to transfer funds into her name alone with no medicaid eligibility penalty. You will b able 2 maintain ur house! The specifics will depend on ur exact circumstances, so too complicated w/o professional assistance. You need an experienced atty right away ! !
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Cace: Since your home will continue to be an exempt asset so long as you live there, you can make repairs to it, add on a room, etc., without it being deemed a transfer that can cause a penalty.
As far as income, none of your income will need to go to your husband's care, ever, once he is on Medicaid. To the contrary, it is sometimes possible to get some of HIS income allocated to you, if your income is below around $1,900/month. Since the rules do vary per state, before transferring assets it is definitely a good idea to consult with an elder law attorney.
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