Revocable Living Trusts and Medical Assistance

When doing a estate planning consult with potential clients, one of the first things that comes to my mind is whether or not there is a medical assistance issue.  Will be discussing a trusts and their effect on medical assistance in this article.

Medical Assistance in Minnesota

We discussed the meanings and definitions of medical assistance in prior articles. In a nutshell, medical assistance is state funded health insurance for people who cannot afford the often extraordinarily high cost of hospice, nursing homes, care facilities, and other costs associated with end-of-life-care or long-term health-care.

I often explain to clients that just like any other creditor, the State of Minnesota wants to be reimbursed for funds that they pay for healthcare. After all, they have an obligation to the rest of us as taxpayers.

The way that the state of Minnesota will collect on their “loan” of medical assistance is by placing a lien against the applicant’s estate. That lien will attached to a person’s home, retirement assets, bank accounts and any other monies that that person may have to repay medical assistance.

Medical assistance and Revocable Trusts in Minnesota

Another common question that often comes to mind is whether Minnesota for federal estate taxes will come and wait. For this article I wanted to discuss only the medical assistance portion of that consult.

The laws, as they currently stand in Minnesota, state that the state government has a five-year-look-back-period on all assets of the applicants when they apply for medical assistance.

What this, in essence, means is that when someone applies for medical assistance, they need to report all assets and net worth net worth from the date of application and for the previous five years. In this way the state can look back and see whether or not someone has tried to hide money or assets of the previous five years prior.

What does this mean for most people? For most people, they will want to do estate planning prior to getting ill or sick because that is when medical assistance will be applied for. Unfortunately, many people do not think ahead and plan for medical assistance. So, when planning ahead, Minnesota estate planning attorneys will advise clients that assets maybe transferred to a Revocable Living Trust at any time.  Hopefully, by planning ahead, the five-year-look-back-period will not be a problem.

In this way, and assets that a person owns which are transferred to a trust will not be subject to a lien for collectible by the state would apply for medical assistance, as long as transferred to the trust is done within five years prior to apply for medical assistance.

This is the most important concept that people need to understand when I explain state planning, medical assistance, and Revocable Trusts in Minnesota.

Are there any ways to plan ahead of the medical assistance problem?

For more permission please contact my office at 612-424-0398 to discuss your estate plan and possible benefits of the Revocable Living Trust as they apply to Minnesota medical assistance problems for you.