Protecting assets with a Medicaid trust

On Behalf of | Dec 31, 2021 | Estate Planning, Wills & Trusts |

If you have the expectation of receiving long-term care as you age, then a Medicaid trust might be useful. Medicaid, if granted and used, enables you to protect your savings and retirement funds. During estate planning in California, it’s important to plan for your quality of life and not just death. The care you receive while alive doesn’t even have to be paid for by you.

Transferring assets to qualify for benefits

Wealth is a complex issue when applying for public assistance or reduced taxes on an estate. The more wealth involved, the further that estate owners are from qualifying for public assistance. Government programs use public funding and therefore strive to only render services to those in need. People with disabilities are, as a result, taxed based on their wealth status. For this reason, many residents, instead, reduce their trackable wealth by using trusts.

Financial eligibility for Medicaid

If you receive Medicaid, then the funding you’re granted is based on your financial worth. In California, there are ways to reduce your publicly stated income for disability purposes. The income you earn, for example, that goes straight into a trust is immediately shielded once in that trust. This is one way of using estate planning to improve your Medicaid eligibility. As you strategize to adjust your estate for Medicaid eligibility, consider entrusting the following:

  • Earned wages and income
  • Retirement or trust distributions
  • Pension payments and inheritances
  • Annuities, dividends or interests

Estate planning in California

Your quality of life in retirement or while aging is a delicate matter. No one can determine exactly what their medical needs will be. What estate owners can do, however, is prepare for the unexpected. Prepare by developing your estate through a plan that builds wealth while maintaining your estate’s qualifications for public assistance.