Nothing is quite as stressful as the decision to place a loved one into a nursing facility. While dealing with their health issues is difficult enough, figuring out how to pay the astronomical cost of skilled nursing care in Maryland and around the country can make the situation even more challenging. Good financial planning for an event such as this can save you a ton of worry and stress when the time comes, and an irrevocable trust could be an option to consider.
What is an irrevocable trust?
An irrevocable trust holds designated financial assets and is managed by a third party. Once assets are placed in the trust, you no longer have control over them, and the trust cannot be changed by you. The trustee will govern all decisions regarding the trust and holds total control over your assets.
Why choose an irrevocable trust?
After reading the description above regarding an irrevocable trust, it almost seems to be a last-resort option. After all, who would want to give up control over their assets? The short answer is someone that needs Medicaid to help pay for skilled nursing care.
The average cost of a nursing home bed in a semi-private room runs to thousands of dollars per month. Many who need skilled nursing care will not be able to afford to pay such a high bill privately and will need to rely on Medicaid to share some of the costs. The problem with this plan is Medicaid will require that you spend down your assets to no more than $2000 in the bank and will limit you to $2382 in monthly income. Assets placed in an irrevocable trust for at least 60 months before nursing care is needed are not subject to a Medicaid spend down and cannot be collected by Medicaid for repayment from your estate.
Protecting assets from Medicaid and structuring an effective irrevocable trust requires skilled and knowledgeable planning. However, if executed correctly, you may be able to protect your most valuable financial investments for the benefit of your care and your loved ones.