You may be considering using a trust to pay for long-term care if you live in Washington and are planning for the future. It comes as no surprise that long-term care can be incredibly expensive, which is why long-term care trust planning in Washington is crucial. By understanding what your options are, you can better plan for the future so that the burden is not placed on your loved ones.
What Is a Trust and How Does It Work?
Before we discuss how you can use a trust to pay for long-term care in Washington, what exactly is a trust? A trust is a legal document often used to protect assets and outline a person’s last wishes.
To put it in simple terms, a trust is when one person holds the title to the property within the trust, keeping or using the property for the benefit of another person. It allows you to put your assets into the trust and designate a trustee to manage and distribute the assets. You can also name beneficiaries, who will receive the assets when you pass away.
If you are trying to use trust funds for medical expenses, you also need to be aware of revocable vs irrevocable trusts in Washington. Here is a breakdown of what both of these options are:
- Revocable trust: A revocable trust offers flexibility by allowing you, as the grantor, to make changes at any time.
- Irrevocable trust: An irrevocable trust is generally the same as a revocable trust, except it does not offer the same flexibility. Once established, you will not be able to make any changes to an irrevocable trust without either a court order or approval from all of the trust’s beneficiaries.
Can You Pay for Long-Term Care Directly From a Trust?
Using trusts for nursing home costs can come with challenges, as there are many factors you need to consider. If you have a revocable living trust, this means that you will technically retain ownership of your assets, so they can be used to cover long-term care expenses. Keep in mind that this also means that these assets are counted when determining your Medicaid eligibility.
However, if you are using an irrevocable trust, the same rules won’t apply since ownership has been transferred to the trustee. A type of irrevocable trust specifically designed for long-term care is a Medicaid asset protection trust, or MAPT.
A MAPT protects assets from being used to pay for long-term care so that your beneficiaries will still get their inheritance, no matter the extent of your care needs. But if you choose this option, the MAPT must be established at least five years before you apply for Medicaid because of the five-year look-back period.
So, if your goal is to use your trust to pay for your long-term care needs, a revocable trust is the right option. Just remember that this can also put your assets in a vulnerable position as they can be taken to pay for long-term care costs, resulting in beneficiaries not having access to their inheritance. Having significant assets in a revocable trust could also put you at risk of not meeting the Medicaid eligibility requirements.
To better understand what your options are and what type of trust is the best fit, you should discuss this with an elder law attorney.
Tips For Creating a Trust to Pay For Long-Term Care
Now that you know how you can use trusts when planning for long-term care costs, there are some additional things you should consider. Many factors can impact how effective these trusts are, which is why you need to do your research before moving forward with your estate plan.
- Appointing a trustee: If you are creating an irrevocable trust, you will need to appoint a trustee who will have authority over your assets. It’s essential that you choose a trustee very carefully, appointing someone who will respect your wishes and act on behalf of your beneficiaries.
- Adding beneficiaries: Additionally, you need to carefully consider who you want to add as beneficiaries and the types of assets they will receive. For a revocable trust, this isn’t as important since you can always go back and make changes. However, for an irrevocable trust, it will be much harder to alter, so you should plan your beneficiaries very carefully.
- Protecting assets: When you plan on applying for Medicaid, you need to carefully consider your assets and the Medicaid eligibility limitations. If you use an irrevocable trust, or MAPT, you can use this document to release ownership of these assets, improving your chances of meeting the eligibility requirements. When you do this, these assets will not be considered yours anymore. But you must do this well in advance, otherwise you risk violating the look-back period.
You should also seriously consider hiring a Medicaid trust lawyer in Spokane who will have experience with this process. An attorney will understand the Washington’s laws and Medicaid restrictions and can help you plan for the future in the best way possible.
Get in Touch With a Long-Term Care Planning Attorney Today
If you want to know more about a Medicaid asset protection trusts in Washington, reach out to a Spokane elder law attorney at Legacy Law Group. Contact us today at 509-315-8087 to speak with one of our attorneys to get the process started.
FAQ
Can a trust be used to pay for assisted-living or nursing home care?
It will depend on the type of trust. Assets in a revocable trust are still legally yours, allowing you to use them for assisted-living or nursing home care costs. However, an irrevocable trust places ownership on the trustee, no longer allowing you to access those assets.
Will Medicaid count assets in a trust against me?
Yes, but only if you have ownership or access to the assets within the trust. If established in advance, an irrevocable trust protects assets, shielding them from Medicaid so that you meet the eligibility requirements.
When should I create a trust if I’m planning for long-term care?
At least five years before you plan on applying for Medicaid, so that you do not violate the look-back period.
