Trusts can complicate ALTCS planning

By January 24, 2011Uncategorized

A trust is a legal entity to which some individuals transfer their assets for estate and tax planning purposes.  Trusts are often used in estate planning because trust property does not have to pass through probate.  As such, trusts sometimes provide seniors with a good way of saving time and money as they pass their property to their loved ones.  Further, in addition to avoiding probate, trusts also have certain tax benefits.  While trusts do have their advantages, however, those who apply for Arizona Medicaid may find that establishing a trust is actually detrimental to their ALTCS planning.

Everybody who applies for ALTCS/Medicaid must undergo a financial assessment, and those with too many assets do not qualify for the benefit.  Without going into too much detail, certain assets do not count against ALTCS applicants when determining eligibility.  The largest of these excludable assets is a home.  If placed in a trust, however, a home becomes countable for purposes of determining ALTCS eligibility, and will likely render the applicant ineligible for the ALTCS benefit.

Financial planners who sell trusts may not fully understand the repercussions that ALTCS/Medicaid applicants may suffer from placing assets such as a home into a trust.  Without knowing that placing a home in a trust could cause problems for those who apply for Arizona Medicaid, these planners sell trusts for a commission.  And, seniors who are unaware of this issue could inadvertently create barriers for themselves should they later apply for Arizona Medicaid.  Before establishing a trust of any kind, seniors should discuss their situation with an Elder Law attorney who fully understands ALTCS/Medicaid.