Here’s a problem that many of my clients face at Morton Elder Law. They have an asset worth a fair amount of money, but they don’t have a lot of liquid cash available.

As they get older, their health starts to incur more expenses, and they’re forced to confront some tough decisions if they want to be eligible for Medicaid.

Why You Might Need a Trust

The best solution to ensure you qualify for Medicaid is through the creation of a Medicaid Asset Protection Trust.

Let’s find out more about this trust and how asset protection in Mississippi can work. As an example, say there’s a family that owns a farm and their mother is getting sick. The farm could be worth hundreds of thousands or millions of dollars, but they can’t sell it and they don’t have a lot of cash on hand to pay for medical expenses.

What can this mother do? She can set up a Medicaid Asset Protection Trust and transfer ownership of the farm into the new trust. Medicaid has a five-year look-back period for transfers of assets, which means that if she transferred the farm at least 60 months prior to needing to apply for Medicaid, the farm would not disqualify her for benefits and the transfer would not penalize her from eligibility.

Instead, it would be saved for the next generation. On the other hand, if she did transfer it more than 5 years prior to applying for Medicaid, that transfer would penalize her Medicaid eligibility.

Getting What You Need

On the other hand, if you plan ahead far enough, you can make sure that your assets are shielded in the Medicaid Asset Protection Trust. Then, after five years, you can start drawing from Medicaid.

In the example of a mother with a valuable farm and little in the way of cash, if she gets along for five years after transferring ownership of the farm into the trust, she should be eligible for Medicaid.

The best part about this arrangement is that you can retain lots of control over this trust, because it’s not a typical irrevocable trust like a Domestic Asset Protection Trust. It’s actually a “flexible irrevocable trust” where you as the grantor retain a great deal of flexibility and control over the trust and its assets. Control plus protection!

Questions? Contact us today for more!

~ Ronald Morton