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How to use trusts to protect seniors in Indiana

On Behalf of | Sep 28, 2022 | blog, Elder Law, trust & probate administration |

Indiana residents might not know how to best provide for their aging parents. While there are government assistance programs available, there are strict rules as to how you can qualify.

Why you would want government assistance

It’s no question that healthcare is expensive. Even with the help of insurance, paying for assisted living, nursing homes, or even at-home help for a few hours a week can break the bank.

Medicare is a government assistance program for seniors aged 65 and older, but there are limits to what it can cover. Medicaid can cover whatever Medicare doesn’t, but families can only take advantage of that if the total sum of all assets in their account doesn’t go over $3,000.

How to qualify for Medicaid

Medicaid will look at all assets and accounts in a person’s name in order to see if they qualify. This includes:

  • Cash in your savings and checking account
  • Investments like mutual funds, stocks, bonds
  • Other savings accounts that are fluid

Unfortunately, it’s very easy to go over the $3,000 when all of that is considered. Some seniors will only go through Medicaid if they’ve exhausted all of the money in their savings and investments, which leaves nothing behind for the family that has taken care of them.

However, Medicaid does not include any assets that are in irrevocable trusts. By taking all of your parents’ money and putting it into an irrevocable trust, you’re protecting their life’s savings while also helping them qualify for Medicaid to get the help they need.

Downsides of irrevocable trusts

It’s not an immediate solution – Medicaid will look back to see if any money has been transferred into irrevocable trusts within the last five years. If so, they may deny your application until more time has passed.

Irrevocable trusts also can’t be reversed, so adult children might end up fronting the bill for their parents for a little bit. Making these decisions can be difficult, but for many families, it can be a lifesaver.