This past week, I had a 74-year-old client and her 78-year-old husband ask me if they should replace their current Joint Revocable Living Trust with a Joint Irrevocable Trust.
In this couple’s case, it made sense to replace their Living Trust with an Irrevocable Trust, often called a Medicaid Asset Protection Trust (the “MAPT”). They are both in good health, and therefore there is a good chance they will not require long-term care during the Medicaid five-year look-back period.
The new MAPT that they created is funded with the couple’s assets so that the assets will not be counted towards the miniscule Medicaid asset eligibility limits.
But Medicaid considers assets AND income when assessing one’s eligibility for long-term care.
Therefore, when the couple is ready to apply for Medicaid five years from the date they created and funded the MAPT, they will create a Qualified Income Trust (a “QIT”), funded with their income that exceeds the Medicaid income eligibility limits.
With a MAPT and QIT properly created and funded, this couple can secure Medicaid coverage when they need it.
Thus, they will be able to leave a sizable inheritance to their loved ones, rather than having to deplete their entire life savings on skyrocketing nursing home and/or assisted living facility costs.