If you are at or over retirement age, you may have already had to consider whether your assets and retirement income would potentially impact your eligibility for Medicaid if you need it in the future. Medicaid requirements are much different than Medicare, and Medicaid also pays for more services, which means older adults may require Medicaid coverage as they age.
Many retired adults engage in careful estate planning and long-term care planning to ensure that they can receive Medicaid benefits in the future in the event that they require long-term care. If you have a spouse you believe could live longer than you, you may also need to consider whether an inheritance will affect state benefits they depend on. The same is true for children and other dependents, particularly special needs family members.
When creating your estate plan, you should carefully consider the potential impact of an inheritance on the benefits your loved ones currently receive or may need to collect in the future.
Trusts are a good way to protect benefit access
A lump-sum inheritance can leave someone financially vulnerable for five years if they need Medicaid benefits. For those who receive more than what is allowed under the strict qualification guidelines, they may not receive Medicaid coverage until they spend those funds on medical care.
The entire amount that you leave behind for someone may have to be repaid into the government's coffers before state insurance programs will cover any of the medical care your loved ones need. Obviously, that is not an optimal outcome for someone who has carefully planned for the needs of their dependents.
Creating and funding one or more trusts as part of your estate plan can help protect the legacy you want to leave for your loved ones, as well as their ability to qualify for state aid like Medicaid. These concerns are particularly important for those with special needs family members.
A trust will also give you control over the use of those assets
Do you worry that someone in your life could take their inheritance and frivolously spend it on shopping sprees or over-priced vacations? Is there someone with a history of gambling, drug abuse or compulsive shopping that might not handle a large inheritance well?
If the answer to either of these questions is yes, creating careful rules for your trusts can help prevent the people you love from squandering their inheritance. The kind of trust you create and the number of trusts you fund will vary depending on your financial and familial circumstances.
Unique situations require unique and carefully crafted solutions. Consulting with an experienced New York estate lawyer can help you plan for the financial future of the people you love.
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