Trusts

Charitable remainder trusts

These trusts allow you to use your own assets for long-term care with the added benefit of reducing taxes. This type of trust is typically used by people with significant wealth who donate specific types of assets to a public charity at fair market value. The individual making the donation receives a tax deduction on the amount that has been gifted. The donor then receives payments from the trust that can be used to pay for long-term care. Once the donor dies, the balance of the funds in the trust go to the charity.

Important considerations

• The funds available to you are based on the amount of your donation. These payments are only likely to be large enough to help pay for long-term care expenses if you have donated a substantial amount of money to the charity.
• A charitable trust may not provide enough income to pay your long-term care expenses.
• The donation may affect your Medicaid eligibility.

Back to Top

Medicaid disability trusts

The purpose of a Medicaid disability trust is to enhance the quality of life of an individual with a disability who also qualifies for public benefits. Medicaid disability trusts are limited to people with disabilities under age 65. With this type of trust, assets are managed by a non-profit organization. The trust may be established by a parent, grandparent, or legal guardian for the benefit of the person with a disability. This is the only kind of trust that is exempt from rules regarding trusts and Medicaid eligibility.

Important considerations

• If Medicaid benefits are paid on behalf of the individual, any amount remaining in the trust at the individual's death can be recovered by the state.
• There are complex tax implications. Consult your tax professional when considering establishing a Medicaid disability trust.

Back to Top