If you’re in declining health and you have a substantial estate to deal with in Connecticut, you’re probably worried about preserving that wealth for your heirs. However, if you end up entering a nursing home, your estate could dramatically decrease as it will go to pay for your care. Can you do anything to preserve your wealth?
Planning ahead is essential
Several asset transfer strategies can protect wealth for your heirs. Among the most popular options to consider is establishing an irrevocable Medicaid trust. Such trusts simulate gifts to your children or other heirs by funding them with assets like your home, vehicles and investments. Your heirs are generally the trustees. As long as the trust is created five years before you apply for long-term care benefits provided by Medicaid, this wealth will not be considered for payment for your care and won’t affect your eligibility for government assistance.
Medicaid trust considerations
Before creating a Medicaid trust, you should keep several things in mind, including choosing a trustee who will have your best interests in mind. You can also draft the trust with the provision to occupy your property until such a time that you can no longer care for yourself. These trusts have financial implications, which you should also weigh during the estate planning process.
Crafting an estate plan
Including a Medicaid trust is only one part of a well-crafted estate plan. Other asset transfer strategies may also work to protect your wealth from potential future long-term care costs. Carefully review the type of trust available along with the tax and legal implications for each.
Even if you already have an estate plan in place, you can still change its structure. A wise strategy is to review your estate structure every few years to determine whether it still meets your needs.