Seniors may need help paying for skilled nursing facilities, at-home help or assisted living. An asset protection trust can help seniors pay for constant nursing care in Indiana. Medicare only covers nursing facilities for short-term rehabilitation. Medicaid may cover a long-term nursing facility stay if the person’s countable assets are under $2,000 or $3,000. The average nursing home costs were over $247 a day and higher in the city during 2019.
How do trusts protect a senior’s assets?
The trust and probate administration uses two types of trusts, which are revocable and irrevocable. Medicaid considers the person as the owner of assets in a revocable trust and includes them as countable assets. If the revocable trust exceeds the Medicaid limit, the person doesn’t qualify for assistance. An irrevocable trust allows a person to transfer control of their money. Medicaid doesn’t count any trustee-controlled assets. Medicaid has a five-year look-back period when determining if a person qualifies. Any assets not in an irrevocable trust during that time are countable assets.
The tax advantages of a trust and what are trustees’ responsibilities?
Trusts benefit assets by increasing their cost basis, which gives tax savings to the heirs. All assets outside trusts carry their original cost basis during inheritance. The tax consequences on assets received through a trust are much lower than ordinary assets. Seniors should choose the proper trustee when creating a trust. Trustees preserve a person’s assets and decide how to distribute money to beneficiaries. A reliable trustee will understand how to spend the money to benefit the senior.
Many seniors exhaust their life savings before turning to Medicaid. An irrevocable trust can help seniors qualify for Medicaid without exhausting their life savings. A proper irrevocable trust helps them and their heirs get more out of their assets. A good-fitting trustee and a knowledgeable financial advisor may stretch their money further.