Income Only Trust can help plan for Medicaid

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Last Thursday, Virginia Attorney Evan Farr conducted a teleconference sponsored by the National Business Institute on the Income Only Trust. It is an irrevocable asset protection trust which may make assets transferred to it unavailable for Medicaid after five years.

Farr warns that seniors should realize that in 5 to 10 years one spouse may enter a nursing home costing in excess of $70,000 a year, risking the eventual impoverishment of the well spouse, with nothing to leave to the children.

If both spouses eventually live long enough to reside in a nursing home in their later years, there will be no inheritance, unless they use a Medicaid Income Only Trust, also called a Medicaid Asset Protection Trust, or MAPT. Although extreme, it may make sense for some individuals, especially those with estates less than one million, whose chief worry is not estate taxes, but the cost of skilled nursing home care.

Instead of relying on crisis planning to qualify for Medicaid at the time of entry into a nursing home, this strategy relies on Income Only Trusts to plan more than five years in advance. The Omnibus Budget and Reconciliation Act of 1993, or OBRA 93, attempted to curtail the use of trusts for Medicaid planning, but did implicitly allow the use of the Income Only Trust.

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Elder Law: Income Only Trust can help plan for Medicaid | news-press.com | The News-Press