A living trust offers the grantor the ability to transfer property to a trustee while they are still living. After the grantor’s death, the trustee can have the property transferred without having to deal with the expense and hassle associated with probate court.

An Irrevocable trust is a permanent entity designed specifically to protect your assets during lifetime, and to avoid the hassle of probate. An individual must transfer their assets into the trust, which becomes the owner, and a Trustee manages that trust. The person making the trust (“grantor”) can also be a Trustee. This transfer can protect your assets from being counted towards the $1,600 Medicaid eligibility limit. After the 5 year look back period has passed a Medicaid application cannot be penalized for this transfer, either. The Deficit Reduction Act, created by Congress in February 2006, changed the application rules for Medicaid. This act established what is known as a look-back period. This waiting period allows Medicaid to examine your finances over the five years prior to the application. Since the creation of this act, people who hope to qualify for Medicaid have to think five years ahead. Those who suffer from a chronic illness have to plan and transfer their assets at least five years before they need Medicaid in order to qualify without penalty. Last minute crisis planning options are available, particularly when there is a spouse, or a disabled child.

A pooled trust is a tool often used by senior citizens or those with long term disabilities to qualify for public benefits, such as Medicaid, without having to deplete assets totally. Pooled trusts are only available in some states and can be very difficult to understand.

Revocable trusts are different than irrevocable trusts because they can be changed or cancelled by the grantor. These are appropriate for individuals seeking to protect assets for those who should not inherit outright for reasons of age, debt, or other considerations, as well as to minimize the probate process. However, these trust will not protect assets if the grantor needs long term care. Medicaid eligibility rules would require that all revocable trust assets be spent before eligibility is possible. The Deficit Reduction Act, created by Congress in February 2006, made changes to the way a senior qualifies for Medicaid. This act established what is known as a look-back period. This waiting period allows Medicaid to examine your finances over the past five years. Since the creation of this act, people who hope to qualify for Medicaid have to think five years ahead. Seniors who suffer from a chronic illness have to plan and transfer their assets at least five years before they need Medicaid in order to qualify.

A trust for a disabled child or adult protects assets while maximizing benefits eligibility. In many cases, when a person receives government benefits, such as Social Security or Medicaid, gifts or inheritances that they receive can reduce or even eliminate any eligibility for these benefits.