Paying For Home Care Services Using a Trust
In Massachusetts nursing homes which is the most expensive option for care costs an estimated $90,000 annually. This can put a financial strain on even the wealthiest family. A trust is another way to help families pay for home care services. An irrevocable trust which is also referred to as a “medicaid trust” can be set up as a means to pay for your home care expenses opposed to paying for long term care insurance.
Article that Compares Using Long Term Care Insurance and Irrevocable Trusts to Pay for Home Care
Any plan for retirement and end of life should contain a number of elements designed to provide for your needs should you become disabled or ill and need extended medical care. ………….
Definition of an Irrevocable Trust
- An irrevocable trust is a legal entity that holds assets on your behalf. These assets are managed and distributed according to your instructions in the trust document. Irrevocable trusts cannot be altered or repealed once they have been established. Irrevocable trusts can be set up for a number of reasons and hold a variety of assets.An irrevocable trust may be designed to provide for your long term care. In this case, trust assets would be accessed to pay for medical bills, hospice, prescription drugs and other necessities during your illness. The trustee (a person or entity you designated to manage the trust) is responsible for distributing assets and for maintaining your quality of life………………….
Benefits and Drawbacks of an Irrevocable Trust
- An irrevocable trust is restricted only by the parameters you create when you set it up. It may pay for non-medical expenses such as the upkeep of your home or the maintenance of a spouse or dependent child. When you die, the assets left in the trust can be used to pay estate expenses or be distributed to your beneficiaries. An irrevocable trust is limited by the value of its assets–it cannot pay out vastly more than you put into it as it is limited by the ability of the assets to earn income.
- Both irrevocable trusts and long term care insurance can be used to aid in planning to qualify for Medicaid benefits. The assets held in an irrevocable trust are no longer under your control, and under certain circumstances this may disqualify them from being counted as assets for Medicaid purposes. Long term care insurance may be used to cover the Medicaid five-year ineligibility period following any gift of assets to a child or other entity. In either situation, you must plan carefully. It is wise to consult a qualified financial planner when considering any Medicaid eligibility issues.