It’s understandable that when someone has worked their whole life and saved their money for a comfortable retirement and to leave a legacy to their heirs, the last thing they want is for all their assets to be used for long-term care.
Many people probably realize that Minnesota has a five-year lookback period. Some may have heard that assets transferred to a trust are not considered during the lookback period.
Is that true?
Different kinds of trusts are treated differently
Minnesota’s Department of Human Services has an extensive list for determining if the assets in a trust are considered available, unavailable, or meet one of the exclusions, such as:
- When the trust was established
- Who established the trust
- Whose assets funded the trust
- Who is the beneficiary
A client-funded trust is a living trust funded by the individual or their spouse. With a revocable trust fund, the grantor can make changes at any time. Therefore, all the assets are considered to be available for the five-year lookback.
An irrevocable trust means that once the grantor creates the fund, they can no longer have access to the assets. If anything is transferred into the fund before the five years, they are not typically counted towards Medicaid eligibility. However, any transfers made into the trust during that period could result in a transfer penalty.
Special needs and pooled trusts benefit individuals with disabilities. There is no penalty for assets transferred during the lookback period, and the assets within the trust are unavailable when determining eligibility for Medicaid.
Minnesota’s regulations regarding trusts and Medicaid eligibility are very complicated. If you are considering making trusts a part of your estate plan, it’s wisest to work with someone who can guide you in making the best decision for your situation.
