Dimitry Tsimberg, Esq.

A living trust will NOT get Medicaid to pay for nursing home

Lately, some clever attorneys have been marketing living trusts in a most deceptive way. Relying on the generality that trusts are separate legal entities (and people's gullibility), these attorneys have been giving presentations in fancy hotels to retirees in which they claim that a living trust can get Medicaid to pay for nursing home costs. They claim that this would be legal because the senior would not have any assets, all of which would reside in the fictious legal entity - the living trust. Many seniors have fallen for this scheme (not just the idea of it all, but so called estate planning documents that end up costing thousands of dollars). You can read about it here.

A living trust is an instrument by which all assets of a person are placed in a "trust." This trust is often seen as a separate "person" in the eyes of the law. One of the advantages of a living trust is that upon death, the assets are distributed by the trustee (a nominated person) directly to the beneficiaries, without the necessity of probate (which is necessary if a will or there is no testamentary document left at all). Probate can be a lengthy judicial (court) process and may involve substantial costs, which will drain the estate assets.

However, please take note that transfering your money to a living trust does not mean that you no longer have any money. For various legal reasons, not to mention common sense, a living trust may not be used to qualify for government programs such as Medicaid, in which having no assets is a requirement. Although it is true that the trust is a separate legal entity, it is one that you control (a living trust is revocable prior to death). So, the money is still yours to dispose in any way you see fit.

This post is for educational and information purposes only. It is not legal advice on any particular case, and merely a general opinion of one California lawyer. You should not rely on it without consulting a competent attorney in your area about your specific case and facts. It is not intended to, and shall not, create an attorney-client relationship. So, be happy you got some free info and use your grey matter!

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