Irrevocable Asset Protection Trusts and Medicaid Planning
Troy C. KieferTroy C. KieferAn Irrevocable Asset Protection Trust is an estate planning tool that can help protect assets while also planning for the possibility of future long-term care needs. Many people are surprised to learn that Medicare does not generally pay for long-term nursing home care. Medicaid may help, but only after strict financial rules are met.
With an irrevocable trust, a person transfers selected assets into the trust. Because the trust is irrevocable, the person giving the assets away cannot simply take them back. The tradeoff is that after 5 years Medicaid will not count the transferred assets toward Medicaid eligibility.
These trusts are often used to protect homes, farmland, investment accounts, or other assets intended for children or loved ones. They may also help avoid probate and provide orderly management of property after death.
However, an irrevocable trust is not right for everyone. The person creating the trust gives up direct control over the transferred assets, and timing is very important. Planning early is usually best.
