The Usefulness of Trusts in the Medicaid Planning Process

Doctor Talking to a Patient

For many people, especially seniors, one of their greatest goals is to leave a legacy for their families, be it great or small. One key aspect of that legacy is their home, and one large threat to that goal is the prospect of a nursing home stay and the resulting need for Medicaid benefits. “Is Medicaid going to take the house?” is an oft-asked refrain. The answer to this question may boil down to how much, and how well, they’ve planned.

Under federal law, each state must enact laws designed to recover from the estates of citizens who receive Medicaid assistance. The federal laws do not mandate the specifics of how the states should pursue recovery from estates, resulting in substantial variation in these programs from one state to the next.

Wisconsin has one of the most vigilant and aggressive Medicaid estate recovery programs in the country. The Wisconsin program takes a two-prong approach. In addition to filing claims against the probate estates of deceased assistance recipients, Wisconsin takes the added step of filing liens on the homes of certain citizens who receive assistance.

With proper estate planning, including the appropriate use of trusts, one can significantly lessen the financial burden of receiving medical assistance. The use of irrevocable trusts can serve as a key element of an estate plan equipped to deal with the possibility of receiving Medicaid benefits.

A supplemental needs trust is a special form of irrevocable trust that can benefit Medicaid recipients. The keys to this trust are ensuring that the distributions from the trust to the Medicaid recipient are small enough such that they do not exceed Medicaid’s asset or income eligibility qualification limits, and that the trust does not allow the Medicaid recipient to hold any amount of control over the trust. If the trust is not irrevocable, or if the Medicaid recipient maintains any degree of control over the management of the trust’s assets, then those assets are “countable” against that person for Medicaid eligibility, which defeats the purpose of the trust.

To learn more about how proper trust planning may help prepare you for the possibility of a nursing home stay, and the potential need for receiving Medicaid benefits, consult a knowledgeable Wisconsin trust attorney. Madison trust attorney Daniel J. Krause of Krause Donovan Estate Law Partners, LLC has many years of experience using trusts to help people plan their estates. With the help of Attorney Daniel J. Krause, you can obtain a plan that prepares you for whatever the future may hold.

Contact us through our website to schedule your confidential, no-obligation initial consultation.

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