A disturbing Massachusetts trend may jeopardize your life-savings

On Behalf of | Aug 31, 2015 | Articles

On behalf of John Gianino

A disturbing trend in Massachusetts is threatening Medicaid eligibility for residents who have irrevocable trusts. Learn more and get answers here.

A once reliable asset protection strategy has come under fire in Massachusetts, creating confusion and uncertainty for many people throughout the state. In order to understand the extent of the issue, following is some background information.

The cost of a skilled nursing facility in the Greater Boston area can exceed $10,000 per month, an expense very few Bostonians can afford. Chances are that you will need a plan for affording nursing home care, if needed in your future.

Paying for skilled nursing care with MassHealth benefits

MassHealth – the Massachusetts Medicaid program – provides an invaluable benefit to state residents who require extended nursing care.

  • How does MassHealth help me pay for my nursing home care? In general, MassHealth will cover most of your nursing home care costs, provided you meet certain eligibility requirements.
  • Can I qualify for MassHealth assistance if I have assets? Yes, but your “countable assets” must not exceed $2,000 – a higher amount is allowable if you are married.

Qualifying for MassHealth benefits with an irrevocable trust

Fortunately, there are estate planning strategies you can use to
preserve your wealth for future generations without hindering your eligibility for MassHealth payments. Creating an irrevocable trust is one way to reduce your countable assets – allowing you to qualify for MassHealth benefits – without giving away your life-savings.

  • How can an irrevocable trust help me protect my assets? By placing your assets – like your home – into an irrevocable trust, the values of those assets are no longer “countable,” and it is far easier for you to stay below the $2,000 threshold established by MassHealth.
  • How does an irrevocable trust work? By
    transferring your assets into an irrevocable trust, you are giving up your ownership rights while keeping rights to use any income as you see fit.
  • What is the five-year look-back rule? As with many aspects of your life, timing is everything. Assets you give away within five years prior to your death can be “pulled-back” into your estate. This “look-back” rule means that MassHealth will include any transferred and gifted amounts as countable assets, and it can force your estate to reimburse money spent on your nursing home care.

A disturbing trend in Massachusetts may destroy your plans

Unfortunately, over the past few years, MassHealth has been applying a stricter interpretation of irrevocable trust provisions. Not only must you be concerned with the five-year look-back period, you must also make certain that your trust assets are not countable for Medicaid purposes.

  • What is MassHealth doing? Claiming that assets in irrevocable trusts are “countable,” MassHealth is denying eligibility for numerous state residents.
  • Do I need to change my trust documents? If you already have an irrevocable trust, have a skilled trust attorney in Massachusetts review your existing trusts documents to ascertain if changes are necessary. A number of lawsuits are making their way through the state courts and an experienced lawyer will know how to restructure your trust to address these disturbing developments and the constantly changing legal climate.
  • What do I need to do? Do not wait until it is too late to seek legal help. An experienced estate planning attorney will advise of
    your Medicaid planning options, and will help you establish an estate plan that protects you and your family.