Is there a way to protect assets from being used for long term/nursing home care with a trust?

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Is there a way to protect assets from being used for long term/nursing home care with a trust?

A person with long term care insurance may run out of insurance and still need
care. Would like to preserve assets before that happens

Asked on March 30, 2019 under Estate Planning, North Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

This could have been done if done more than 5 years ago. Unfortunately, specificaly to avoid people from hiding assets from Medicaid and forcing the taxpayers to pay for their care, there is a five-year "look back" period: Medicaid can undo any transactions occuring withing 5 years of when they started paying, unless the transaction was a fair-market-value one (i.e. the person was paid the actual, fair value for whatever, like a home, was transferred), since that case, even though the person has transferred the asset, he has the money he received for it to pay for his care. But non-fair-market-value transactions are seen as fraudulent--an attempt to hide assets--if done less than 5 years before Medicaid is needed (e.g. for a nursing home), and so can be undone or voided. As a result, such relatively last minute transfers, including to a trust, do not protect assets. (Consider: if it was that easy to protect assets by putting them into a trust at the last minute, everyone would do that, no one would pay for their care costs, and the taxpayers would always foot the bill.) To use a trust to protect assets, you must use it well in advance.


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