GROSSKOPF & BURCH
  • Home
  • Attorneys
    • Aric Burch
    • Jessica Merkel
    • Peter Grosskopf
  • Legal Services
    • ELDER LAW
    • ESTATE PLANNING
    • PROBATE & TRUST ADMINISTRATION
    • SPECIAL NEEDS TRUSTS
  • Blog
  • Additional Resources
  • Contact Us
  • FAQ

BLOG

Our blog provides information on all aspects of estate planning, elder law,
​and special needs planning

Using Trusts In Medicaid Planning

3/1/2023

 
With careful Medicaid planning, you may be able to preserve some of your estate for your children or other heirs while meeting Medicaid's low asset limit.

The problem with transferring assets is that you have given them away. You no longer control them, and even a trusted child or other relative may lose them. A safer approach is to put them in an irrevocable trust. A trust is a legal entity under which one person -- the "trustee" -- holds legal title to property for the benefit of others -- the "beneficiaries." The trustee must follow the rules provided in the trust instrument. Whether trust assets are counted against Medicaid's resource limits depends on the terms of the trust and who created it.

An "irrevocable" trust is one that cannot be changed after it has been created. In most cases, this type of trust is drafted so that the income is payable to you (the person establishing the trust, called the "grantor") for life, and the principal cannot be applied to benefit you or your spouse. At your death the principal is paid to your heirs. This way, the funds in the trust are protected and you can use the income for your living expenses. For Medicaid purposes, the principal in such trusts is not counted as a resource, provided the trustee cannot pay it to you or your spouse for either of your benefits. However, if you do move to a nursing home, the trust income will have to go to the nursing home.

You should be aware of the drawbacks to such an arrangement. It is very rigid, so you cannot gain access to the trust funds even if you need them for some other purpose. For this reason, you should always leave an ample cushion of ready funds outside the trust.
You may also choose to place property in a trust from which even payments of income to you or your spouse cannot be made. Instead, the trust may be set up for the benefit of your children, or others. These beneficiaries may, at their discretion, return the favor by using the property for your benefit if necessary. However, there is no legal requirement that they do so.

One advantage of these trusts is that if they contain property that has increased in value, such as real estate or stock, you (the grantor) can retain a "special testamentary power of appointment" so that the beneficiaries receive the property with a step-up in basis at your death. This will also prevent the need to file a gift tax return upon the funding of the trust.
Remember, funding an irrevocable trust within the five years prior to applying for Medicaid (the "look-back period") may result in a period of ineligibility. The actual period of ineligibility depends on the amount transferred to the trust. 

If you have questions regarding your Trust or any elements of your Estate Plan, please contact our office . 

    Authors

    Attorney Aric Burch
    Attorney Jessica Merkel
    ​Attorney Peter Grosskopf

    Archives

    June 2025
    December 2024
    September 2024
    March 2024
    January 2024
    November 2023
    July 2023
    June 2023
    May 2023
    April 2023
    March 2023
    February 2023
    January 2023

    Categories

    All
    Elder Law
    Estate Planning
    Medicaid Planning
    Power Of Attorney
    Trusts

    RSS Feed

    The blog posts are based upon the law at the time the post is written. Laws change, so you should not rely on this blog for legal advice.  In addition, this blog is not intended to be legal advice, and you should not act upon any information on this blog without discussing your specific situation with your attorney. 
A good man leaves an inheritance to his children's children. ~ Proverbs 13:22


Grosskopf & Burch
Pay Invoice
(Will open a new page)

Two Locations to Serve You and Your Family

Eau claire office (main)

​​1324 W. Clairemont Ave., Suite 10
Eau Claire, WI 54701
Phone:  715-835-6196
​Fax:  715-835-1882


​​HOURS
​
MONDAY - THURSDAY

8:00 am - 5:00 pm
​(Closed for lunch from 12:00 pm - 1 pm)

FRIDAY
8:00 am - 12:00 pm

marshfield office

1001 N. Central Avenue
Marshfield, WI 54449
Phone:  715-350-2227

​Fax:  715-350-2127
​
​​HOURS
​
MONDAY - THURSDAY

8:00 am - 5:00 pm
​(Closed for lunch from 12:00 pm - 1 pm)
FRIDAY
8:00 am - 12:00 pm

Elder Law Answers
CELA - National Elder Law Foundation
NAELA Member
Picture
Special Needs Alliance Member
Elder Law Section

© 2025 Grosskopf & Burch, LLC       Disclaimer    Privacy Statement
  • Home
  • Attorneys
    • Aric Burch
    • Jessica Merkel
    • Peter Grosskopf
  • Legal Services
    • ELDER LAW
    • ESTATE PLANNING
    • PROBATE & TRUST ADMINISTRATION
    • SPECIAL NEEDS TRUSTS
  • Blog
  • Additional Resources
  • Contact Us
  • FAQ