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Long-Term Estate Medicaid Planning


As attorneys who practice estate planning here in Florida, we frequently receive questions about the connection between estate planning and access to benefits and programs people may need as they age, such as Medicaid. Many people have questions about how Medicaid will treat their assets in terms of determining whether they qualify for assistance, and this is a real concern, especially if nursing home care is needed.

Indeed, there are a number of considerations to take into account when it comes to ensuring that certain legal requirements are not violated in order to continue to qualify for certain benefits and programs as you age. While some clients have asked about domestic asset protection trusts, which can help ensure that one stays Medicaid-eligible if, for example, if it is necessary to help pay for long-term care, Florida does not authorize these types of trusts, and setting them up in a state that does authorize them could lead to conflict in the courts and a trust that is ultimately unenforceable.

Below, we discuss some of the logistics of planning for these needs:

How It Works

In general, what is relevant in terms of Medicaid is to what extent the trustee can distribute amounts in the trust to the trust owner. This includes irrevocable trusts to the extent the trustees must make distributions to the trust owner as well. However, note that this is only relevant to the extent that the trustee must make a distribution; if there is no requirement to make a distribution, then it cannot be counted by Medicaid. If, for example, the trust is set up under someone’s will, and the trustee simply could make a distribution, Medicaid will not count that trust.

However, also note that if someone were to transfer assets into the trust where they cannot be counted, and then applies for Medicaid in order to get around these rules, a Medicaid transfer penalty could result. That being said, there is no transfer penalty if the transfer is done by will and the transfer into the trust is done under a will.

Irrevocable Asset Protection Trusts

One option that some pursue here in Florida is setting up an irrevocable asset protection trust (also known as a Medicaid Asset Protection Trust) at least five years prior to when you anticipate needing access to benefits that programs such as Medicaid provide. Note that following rules that apply to these trusts:

  • While you will not have access to the principal, you may maintain income interest in the trust
  • You name a trustee to manage the trust assets during your lifetime
  • Upon your death, the trust assets are typically distributed to your children, and the trustee can sell the assets income tax-free

Contact The Very Best in Florida Estate Planning

No matter what your needs are, or where you are in your life with estate planning, Suncoast Civil Law can work with you to come up with a plan that meets your needs now and in moving forward into the future. Contact our Sarasota wills & probate lawyers today to find out more about our services.