Revocable and Irrevocable Trusts for Assisted Living
You cannot use the money in the irrevocable trust to pay for assisted living. In order for the irrevocable trust to be considered exempt for Medicaid purposes, it must provide that no principal distributions can be made to the grantor (your mother) or on the grantor’s behalf.
Irrevocable Trusts and Assisted LivingIn other words, any distribution made from the irrevocable trust to your loved one or directly to the assisted living would violate the terms of the trust. However, if your loved one's house was transferred to the irrevocable trust over five years ago, the money in the trust is protected in the event your loved one requires care in a nursing facility. Even if your loved one is currently in assisted living, it is still important to keep the irrevocable trust in tack because they may need to be transferred to a nursing facility which would result at the rapid depletion of their assets. The average nursing home stay is $15,000.00 per month. The money in the irrevocable would be considered exempt if your loved one needed to rely on Medicaid to pay for the nursing facility.
Revocable Trusts and Assisted LivingThe money that is held in the revocable trust can be used to pay for the assisted living as your loved one maintained complete control over the assets during their lifetime. The revocable trust offers no assets protection with respect to Medicaid eligibility. The assets held in the revocable trust can be freely transferred and the trust can be changed or revoked at any time. Spending the money in the revocable trust on the assisted living is allowable and also the better option as this money is not protected if your mother requires care in a nursing facility.
ConclusionUnderstanding the documents you or your family members have is imperative in order to make sure the maximum amount of protection is achieved during any health crisis.