Many Pennsylvania residents have varying views when it comes to getting older. Some may feel that reaching their golden years will act as a time of enjoyment and relaxation, and other people may believe that reaching their elderly years will rob them of their abilities. No matter which category you may fall into, planning for the latter scenario may work in your best interests.
Though knowing for certain how the future will play out is out of the realm of most individuals’ abilities, you could still take steps to plan for particular situations. For instance, the majority of people over the age of 65 will need some form of long-term care. This need may arise due to illness, injury, disability or incapacitation. Whatever the reason, paying for such care can often prove difficult.
Many people may qualify for Medicaid, a government-based benefits program that could help them with the financial aspects of long-term care. However, in order to meet eligibility requirements, your income and available assets must not exceed a certain amount. You may initially think that you will not qualify for this assistance and need to consider other financial avenues for paying for nursing home stays or other care, but you may have the option of utilizing trusts to qualify for Medicaid.
Using a trust to remove some of your assets from your estate could potentially lower your income and available assets to a point that could allow you to qualify for government assistance. However, following this route could lead to certain penalties if you created the trust within a certain number of years before applying for Medicaid. Additionally, you need to consider certain trust stipulations, such as:
- Irrevocable trust — In order for a trust to benefit you when it comes to Medicaid planning, you must not have access to the assets in the trust or have the ability to revoke the trust. Therefore, you need to create an irrevocable trust. If you have a revocable trust, the assets in that trust may still be considered accessible to you and go into consideration when determining your eligibility for benefits.
- Third-party trusts — When someone creates a third-party trust, it means that a person other than yourself created it with his or her own assets. If you benefit from such a trust, it may affect your Medicaid eligibility. However, if the trust stipulates that any funds received cannot go towards long-term care costs, it may not impact Medicaid qualifications.
Other trust details may also have effects on how beneficial using this tool could be for Medicaid planning. If you would like to gain more information on this avenue for long-term care planning, you may wish to utilize local legal resources.