Revocable Versus Irrevocable Trusts
A Revocable Trust does not help protect against a Medicaid spend down. It’s an important distinction. In my practice, we use Revocable Trusts for the avoidance of probate as an estate planning tool, NOT as a long-term-care planning tool. When you put your assets into a Revocable Trust, you keep complete control over them. Medicaid then does a review and says that since those assets are available, you have to spend them down before being eligible for benefits. In fact, otherwise exempt assets, when placed in a Revocable Trust, are now countable.
This is in contrast to Irrevocable Trusts which are permanent trusts where you place assets, but don’t retain control of them. As long as you establish and fund the Irrevocable Trust five years before applying for Medicaid, those assets are off the table.
Now I can tell you that we occasionally use both Revocable and Irrevocable trusts in a comprehensive care assistance plan, but every situation is different.
If you would like more clarity on what some of the rules are, I’d be happy to share my book: The Long Term Care Solution: The Truth Behind Today’s Long Term Care Planning. If you have any questions or would like to set up a time to sit down and talk about the best time to plan things, please call my office. We have caring and able staff available to help you.