The process of Medicaid asset protection in the state of Florida can be a bit complicated to understand, but knowing the rules, laws, and regulations can help ensure that your money is going to the proper place, and that long-term care will still be provided.

Proper Medicaid asset protection planning can often blindside individuals, most often seniors, if not handled correctly. Generally, Medicaid comes into effect when a senior requires either long-term or nursing home care. It can be difficult to plan ahead for this long-term care (LTC), as the uncertainty of when it will be needed can affect the ability to gain certain benefits and financial situations without proper guidance. An important factor to keep in mind is that the sources of payment for long-term care are limited to either one’s own money, LTC insurance (a policy purchased in advance with established premium payments), or Medicaid. For this reason, it is of utmost importance to plan ahead, and to understand exactly how Medicaid works.

How Medicaid Asset Protection Planning Works

Medicaid is a means-tested program, which implies that applicants must have limited assets and low income to qualify. While many seniors often desire to preserve their money or pass it on to loved ones, Medicaid eligibility requirements largely interfere with these actions. Medicaid generally wants individuals to pay for LTC with their own money first before stepping in. If an individual seeks to move their money elsewhere, or put it aside for something such as inheritance, Medicaid can identify these decisions during what is known as the “look-back period”, and issue penalties that can disqualify them from the program and force them to pay for their own care. To prevent these issues, seniors are most often advised to consider an asset protection trust.

How to Protect Assets From Medicaid

Florida Medicaid Asset Protection Trusts are a viable planning strategy to meet Medicaid’s asset limits when an individual has excess assets. Medicaid Asset Protection Trusts, often referred to as Medicaid Planning Trusts or Home Protection Trusts, seek to protect an applicant’s assets from being counted toward eligibility. Assets placed into these trusts are no longer considered owned by the Medicaid applicant, and also protects assets for the applicant’s family or loved ones, which is a huge win-win situation for many. As most look-back periods performed by Medicaid extend over the previous sixty months (except for California), a Medicaid Asset Protection Trust must be made at least five years in advance.

Florida Medicaid Asset Protection Trusts are created by an individual known as the grantor, trustmaker, or settlor. There must then be a trustee who manages and controls the assets in the trust, however, this person cannot be the trustmaker themselves nor the spouse of the trustmaker. It instead must be an adult child or another relative of the trustmaker. Beneficiaries also come into play as those who receive trust benefits after the trustmaker has passed away. All designated persons within the trust must adhere to strict rules and regulations which are set by the state. Medicaid Asset Protection Trusts must also be irrevocable, which means that the trustmaker no longer owns any of the assets within the trust, nor can they regain ownership of them. If the assets are revocable, Medicaid considers the assets to still be owned by the applicant, and are then counted towards Medicaid’s assets limits.

Components of Irrevocable Asset Protection Trusts for Medicaid

Irrevocable Asset Protection Trusts must be established by either the LTC-seeking individual or an attorney-in-fact five years before applying for Florida Medicaid benefits. Other key components to keep in mind include:

  • No access to the principal trust during the individual’s lifetime
  • Individuals may maintain an income interest in the trust if they desire
  • A trustee must be named to manage assets, which should be a responsible and trustworthy relative
  • Assets in the trust receive a step-up in basis upon death, which means that an individual’s heirs can sell the trust assets tax free upon the individual’s death
  • Assets should probably exceed $150,000 when creating an irrevocable trust
Find an Elder Care and Medicaid Attorney

Walser & Herman Law has been providing elder care and long-term care services in Florida for more than 30 years. We understand that the costs of living in a nursing home or assisted care facility are astronomical, and the complications of Medicaid can be tough to tackle on your own. We recommend working with one of our qualified elder care attorneys in Boca Raton or Palm Beach, so you can plan for this eventuality in advance, and ensure that you have the means to acquire the quality care you need. For those interested, please contact us today with any questions you may have.