Living Trusts Can Affect Medicaid Eligibility

Planning for long-term care is something many families have to consider. For those looking at Medicaid as a future option, it’s important to understand how different estate planning tools can influence eligibility. Living trusts are commonly used to manage assets, but not all trusts are treated the same when it comes to Medicaid. The timing of transfers, the type of trust used, and the way assets are titled all have an impact on whether someone qualifies for benefits as a New Braunfels, TX living trust lawyer can share.

We work with individuals and families every day who want to preserve their resources while preparing for future health care needs. One key point we always address is how a revocable living trust might be viewed by Medicaid during the application process. These trusts can be useful in organizing and distributing property, but when it comes to asset protection for Medicaid purposes, they require a closer look particularly if you are working on estate planning after a divorce. No matter what period of your life you are in, it is best to work with a lawyer to guide you.

When Living Trusts Count Against You

A revocable living trust allows someone to maintain control of their assets during their lifetime. That control, while convenient, also means those assets are still considered “available” when applying for Medicaid. Medicaid has strict asset limits, and if assets in a trust are still accessible to the applicant, they typically count against eligibility.

Irrevocable trusts are different. If assets are placed into an irrevocable trust and the person applying for Medicaid gives up control and access to those assets, they might not count. However, this strategy must be handled carefully and usually well in advance — Medicaid has a five-year “look-back” period that can penalize transfers made too close to the application date. This can all be very difficult to understand and keep up with, which is why you should consult with a lawyer.

What We Help Clients Understand

For some clients, living trusts are part of a broader estate plan such as gifting a home to a child rather than a Medicaid strategy. That’s fine, as long as the differences are understood. Others may need to adjust their plans if long-term care becomes a concern. In either case, understanding which type of trust does what — and when it matters — is key.

At our firm, we’ve seen firsthand how these decisions affect both eligibility and peace of mind. After 29 years of serving Central Texas, we understand how to structure a plan that works for real families and real goals. We also know how intricate these cases can be, so we ensure that you understand the whole process.

Planning Beyond The Trust

Living trusts serve important functions for probate avoidance, privacy, and long-term management. But they don’t offer automatic protection from Medicaid spend-down requirements. That’s why trust-based planning should be only one part of a larger strategy that may include personal care agreements, spend-down planning, and the use of irrevocable tools where appropriate.

Our clients benefit from our deep understanding of how trust law interacts with public benefits. We’ve published four books on legal topics, earning a Legal Excellence Award for Literary Distinction, which reflects the practical knowledge we bring to every matter.

Medicaid rules change, and every family situation is different. If you’re considering how a living trust fits into your long-term plans and want to avoid surprises down the road, we’re ready to help you take the next step. To discuss your options, reach out to us at The J M Dickerson Law Firm. We’ll help you build a plan that’s right for you and your family.