A revocable trust is a tool that is often used by individuals who want to avoid a probate at death. Sometimes these trusts are also used as a way to pass wealth from generation to generation upon an individual’s passing. It is a very common misconception that a revocable trust protects trust assets against Medicaid estate recovery after the trust creator passes away. However, this is not the case.
Minnesota’s Medicaid program (known as “Medical Assistance”) considers revocable trust assets to be countable and available funds when determining eligibility for Medical Assistance. This means that assets held within an individual’s revocable trust will be counted during the application process when an individual is applying for Medical Assistance. This can cause an individual to be financially ineligible to qualify for Medical Assistance so long as the revocable trust funds are still available to pay costs of care. If no additional Medical Assistance planning is done, the assets in a revocable trust will need to be used to pay for the individual’s cost of care until they meet the income and asset eligibility guidelines of the Minnesota’s Medical Assistance program.
In summary, revocable trusts do not shield assets for a Medical Assistance applicant and do not protect an individual’s assets from a Medical Assistance estate recovery claim for the costs of care that individual received during their lifetime. If you or a loved one have a revocable trust but now need to plan for long term care costs and eventual Medical Assistance eligibility, the attorneys at Chandler and Brown, Ltd., can assist you in transitioning to the appropriate plan.