If you or a family member is making use of the Medicaid program, it’s important to keep in mind that states will attempt to recover the costs of that care from the estate of the Medicaid recipient. Unfortunately, in most cases, the only substantial asset remaining at death is the personal home – often leaving families and would-be beneficiaries without the largest item of intergenerational wealth. Those utilizing Medicaid aren’t necessarily stuck in this predicament, however. With some proactive estate planning, you can ensure that your house will remain safe from Medicaid estate recovery.
A Trust Can Provide Protection
The primary method by which we can protect your home is with an irrevocable trust. These trusts can protect your home from estate recovery, liens, and lawsuits by effectively separating it from your own property. After placing an asset, such as your home, into an irrevocable trust, it is essentially separated from your own property. It should be noted, however, that irrevocable trusts are just that – irrevocable. Even though the trust is irrevocable you can still change your beneficiaries and the trust can also distribute assets out of the trust those persons named as lifetime beneficiaries. There are many different considerations that have to be accounted for in establishing an irrevocable trust, so working closely with an experienced estate planning attorney is always recommended to ensure the viability of your trust.
The Benefits of an Irrevocable Trust
The benefits of an irrevocable trust don’t stop at protection from recovery. Transferring the family home into a trust also protects from a higher tax burden on your beneficiary, as simply giving the house to a beneficiary during their lifetime could result in capital gains taxes if the beneficiary sells the house during their own lifetime. The trust will also provide a much safer transfer of the home to your beneficiary, without the troubles of using a direct deed.
The security of your family’s biggest asset shouldn’t be taken lightly. If you’re ready to take the next steps in protecting the family home from Medicaid recovery, contact the Kentucky Estate Planning Law Center today.