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Author Topic: Revocable living trust countable for VA not countable Medicaid?  (Read 3572 times)
sdsjk
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« on: December 17, 2010, 05:38:19 PM »

My mother is in a private pay asst. living in MN.  She has cash only in a revocable living trust that has a FEIN & she has surrendered the assets to the trustee.  I have been told the trust assets will not be countable by the VA A&A but will be countable by Medicaid.  Is this true?  if true is a good plan to leave funds where they are & continue to pay the additonal expenses out of the trust or an individual acct. & when if medicaid is needed to implement a "half-a-loaf" plan?  thank you.
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jpez
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« Reply #1 on: December 18, 2010, 12:10:11 AM »

this is really uotside of our area of expertise.  THe retiring of the granting trustee creates a gift to the trust. That gift is counted for up to 5 yrs.
Since the original trustee no longer has any control of the funds, then (in principle) the funds no longer belong to the granting trustee. as a caveat, the new trustee can't be married to the GT.

With that said, That would not be how I would handle the process.  It seems 'weak'.  the proper trust tool is an irrevocable trust.  Much stronger at protecting assets.  GIfting and half loafing is also not a current, effective strategy.
But, after puttung a strategy into place, you should be asking who set it up or reccommended it, if it will work with all the possible programs.

good luck and welcome,
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AngelaManz
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« Reply #2 on: December 21, 2010, 12:28:37 PM »

If it is a revocable trust, then she likely has access to the funds and therefore they will count as assets for VA and Medicaid purposes.  For the VA, all control must be given up in order to reduce net worth.  A revocable trust typically allows the grantor to revoke it and recapture the funds inside.  This means that the grantor hasn't given up all control and so the funds will be countable for VA purposes.  A better strategy may be to use an irrevocable trust or a Medicaid compliant annuity.  I would suggest that you speak with a local elder law attorney, accredited with the VA, to get more information and create an asset protection plan for your family.  You can find one through the National Academy of Elder Law Attorneys www.naela.org

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jpez
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« Reply #3 on: December 21, 2010, 07:24:18 PM »

Never use a medicaid compliant annuity. Especially in connection with VA planning. How will you get to the funds that you need to pay for more care as it becomes needed.
And by using a product that has to generate income, that can't be stopped, you cut your self uot for other programs that are income tested.
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AngelaManz
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« Reply #4 on: December 22, 2010, 04:17:02 PM »

There is no one right program or product for everyone.  A Medicaid compliant annuity can be a great option to pull down some of the veterans resources while not creating a Medicaid penalty.  I would not recommend that a family put all available assets into the annuity because there will likely be a need for cash down the road.  But saying that someone should never do something is not good advice.  It is better to speak with an attorney who specializes in VA and Medicaid and who can help the family prepare an individualized plan that will meet their needs. 
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