How to Set up a Family Trust to Qualify for Medicaid

Medicare is a state administered health insurance program that is funded by the state and federal government. It is designed to provide certain low income individuals, including the elderly, disabled, pregnant women and children, with health coverage. Medicaid eligibility requires meeting a resource limit, which includes cash on hand, checking and savings accounts, pensions, IRAs, life insurance policies, real estate and other cash-value assets. However, funds placed in an irrevocable trust do not count towards the resource limit.

Instructions

• 1

  Contact your state Medicaid office in order to determine if you must wait a specific period of time after transferring funds to a family trust before you are eligible for Medicaid. Depending on the circumstances, you may have to wait up to 60 months before you will be eligible for Medicaid. These guidelines vary between the source of funds for the trust, the amount placed in the trust and other factors determined by each state's Medicaid program.

• 2

  Decide who will be the beneficiary or beneficiaries of the family trust upon your death or incapacitation.

• 3

  Decide who will manage your trust. This can be an attorney, accountant, an acquaintance or an organization that provides trustee services. Select an alternate trustee in case the primary trustee dies, becomes incapacitated, or in the case of an organization, disbands.

• 4

  Write a trust agreement using a sample irrevocable trust as a general template. The trust agreement should include the grantor's name, Social Security number and address; the primary and alternate trustees' names, Social Security numbers (or Tax ID if it is an organization) and addresses; each beneficiary's name, Social Security number and address; a list of assets included in the trust; a list of what assets each beneficiary receives if multiple beneficiaries are named for the trust; a list of special requirements for the trust (i.e. the beneficiary must be a a specific age before gaining control over the assets in the trust); and the terms for the trust (i.e. assets will be available upon death of the grantor).

• 5

  Contact an attorney who specializes in estate law or a qualified trust preparer to assist with completing and reviewing the trust agreement. Ensure that the trust agreement meets all state-specific requirements for an irrevocable trust.

• 6

  Transfer funds and property to the family trust. Savings, checking and other bank accounts must be transferred from the grantor's name to the name of the trust. Property deeds and other assets must be transferred from the grantor's name to the name of the trust as well.

• 7

  Have the trust agreement notarized. Contact your local courthouse and community banks if you are unsure of where to find a notary, since the courthouse and many banks are able to notarize documents. You and your trustee should both have notarized copies of the trust agreement. You should also keep a copy in a lock box or with a trusted individual.