Medicaid Planning for Mom and Dad; the Elephant in the Room: Part 1

– A guest blog, by Mr. Richard Bush

All parents worry about how to best provide for their children after they are gone. No one worries more than parents of children with disabilities. Questions of wills and estates become overwhelmingly complex when the beneficiary may always need to depend on others. Will my child lose governmental benefits?

Who will manage the estate, and how?  And how can I possibly entrust the welfare of my child to anyone?  Panic is not unfamiliar to many such parents when contemplating a future without them in it.  And yet, the fact is that with our children with disabilities, future planning is literally vital.  Delaying is risky and will only increase our anxiety anyway.

We have been assisting families for the future by preparing Special and Supplemental Needs Trusts for many years.  The focus is always, “how can I provide for my disabled child’s future needs when I am no longer able to provide the day-to-day care”.  However, one of the themes that emerges when we discuss the steps in planning for the child or family member with a disability is; “this is great, but what happens if I get sick or become incapacitated?” 

The most valuable planning vehicle for mom and dad trust is an Asset Protection Trust.  This type of trust can be a strategy to meet Medicaid’s asset limit when an applicant (like mom or dad) has assets that exceed the Medicaid limits. These Trusts are sometimes referred to as Medicaid Planning Trusts, Medicaid Trusts, or less formally, Home Protection Trusts.

Simply stated, these trusts protect an individual’s assets from being counted for eligibility purposes when applying for Medicaid, and enables a person who would otherwise be ineligible for Medicaid to become Medicaid eligible and receive the care they require be at home or in a nursing home.  Assets in this type of trust are no longer considered owned by the Medicaid applicant. These trusts also protect assets for non-disabled children and other relatives, which is a win-win for parents and their families. 

Planning ahead is vitally important! To be completely effective, asset protection trust must meet the 60 month (5 year) “look back” period: this is a period in all states, with the exception of California, and New York. During the look back period, Medicaid any assets that are sold or given away are counted as resources to the Medicaid applicant. Under the Medicaid rules, the transfer of assets to an asset protection trust is seen as a gift. This can result in a period of Medicaid ineligibility.

We encourage questions! If you have questions or need any additional information, please do not hesitate to call or email us at your earliest convenience.

More about our Guest Blogger:

Richard Bush is a past Board member and President of the Council on Developmental Disabilities and a board member of the Down Syndrome of Louisville Education Foundation and a. He is also the father of a child with Down syndrome (Mike) and as a parent, he is versed on the needs of parents and individuals with disabilities.

For more information, contact Richard Bush at 2950 Breckenridge Lane, Suite Nine, Louisville, KY 40220

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