What is a Medicaid Trust?
A Medicaid Trust is an estate planning tool. It is a special kind of irrevocable trust which you can create for the purpose of holding title to your assets and landed property. One good thing about having a Medicaid Trust Brooklyn is it gives you the right to continue living in your house in Brooklyn even when you become old, as well as the right to choose your own trustees. You living in your own estate eliminates the need for a nursing home care, thus eliminating the costs that come with it, while giving full management and legal protection to every asset which you place in the trust. However, Medicaid trusts are not for everybody, and you’ll have to consider some factors or consult a trust attorney in Brooklyn to better understand if this is the right choice for you.
A Trust could either be revocable or irrevocable. The Medicaid trust is an example of irrevocable trusts and therefore once created, can never be revoked. But according to the state laws effective in Brooklyn, a Medicaid trust can only be revoked if all the appointed trustees agree to the termination or revocation of the trust. Actually, the irrevocability of a Medicaid trust is not a problem for most people as you are the one to write all the trust instructions by yourself, and as such, you have to write them in such a way that the trust benefits only you and any other person(s) of your choosing. Most people name their adult children or spouse as their co-trustees. As with trusts, whatever asset you’re placing in a Medicaid trust will go to your beneficiaries at your death without having to pass thorough probate.
You can also retain the right to enjoy all the income earned from the assets which you’re placing in the Medicaid trust Brooklyn. For a residential house, you maintain the right to be living in it; for a rental house, you can choose to be receiving all the rent. It is worthy of note that while prohibiting your access to the principal, those assets (including your home) will not be considered as your property when applying for Medicaid. This is because once you transfer any of your asset into a Medicaid trust, it is considered as a divestment (the sale or disposal of an asset) and hence, will trigger a penalty period. In this light, it is highly recommended you create your Medicaid trust Brooklyn and transfer your assets(be it a house, account, any portion or all of your estate) into the trust while you’re still strong and healthy. By so doing, you can fund your trust and complete the entire look back period appropriately before the need to apply for Medicaid arises.
A Medicaid trust has similar powers as a will in that it can be drafted to name beneficiaries of your trust property and also specify how these property will be distributed when you pass away. But the major distinction of the Medicaid trust over any other estate planning document is it allows distribution of your trust property even while you’re still alive. In effect, just as every other trust, the Medicaid trust Brooklyn eliminates the cost and estate taxes that comes with probate.
Since divestment occurred as soon as you transfer the asset into the trust, distributions can be made to your beneficiaries during the lookback period without attracting a penalty period. Being that your property is held in trust, there is no fear of losing such property due to death, divorce or suing of a beneficiary. You as the creator cannot be a trustee of the Medicaid trust Brooklyn, and neither can your spouse. Whoever you appoint as the trustee has to follow every instruction which you’ve laid down to benefit you, and must obey the trustee law effective in Brooklyn. Note that you can also at any time change who benefits from your trust by using your “power of appointment”, and your beneficiaries get the tax benefits of receiving the property not just as a gift but as an inheritance.
All in all, creating your Medicaid trust Brooklyn should be done in accordance with the federal and state laws binding Brooklyn to ensure that the dictate of the trust is effectively carried out.