Medicaid Asset Protection Trust

11 May 2022 · 1 min

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The speaker explains key Medicaid planning considerations when protecting a family home. If parents place the home in an irrevocable trust, they must wait five years before qualifying for Medicaid; the spouse who does not need care can remain in the house for life, but Medicaid will place a lien on the property to recover costs after death. Transferring the home directly to a child triggers a penalty for a below‑market value transfer, requiring the parents to pay privately for care until the penalty period expires. In both scenarios Medicaid ultimately recovers its expenses, either through a lien or by the parents’ private payments.

Chapters

For Medicaid purposes, it's about 6 of one, half dozen of the other. If your parents put their home in an irrevocable trust and they don't make it the 5 years, they need long-term care before that 5 years is up. If they're both still alive, then the one that does not need care can live in the home for their lifetime, but Medicaid will probably put a lien against the home, which they will recover on after they die. If they put the home in the name of the child, as this question suggests, Medicaid would penalize them for transferring an asset at below market value, and they would have to private pay at the home until that penalty is gone. Either way, Medicaid is going to get their money.