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Medicaid Planning: Residence Transfer in Trust

August 18, 2011

Medicaid Planning: Residence Transfer in Trust

Definition

Various trusts are often used to help one qualify for Medicaid. But in this discussion, a transfer in trust refers to a particular Medicaid planning tool to preserve your principal residence, as well as facilitate your eligibility for Medicaid. That tool is the irrevocable income-only trust.
Prerequisites

  • The irrevocable income-only trust may help you qualify for Medicaid and preserve your principal residence if you anticipate the need for long-term care.

Key Strengths

  • Helps you qualify for Medicaid
  • Provides a present income stream (in some cases)
  • Specifies where trust principal goes after your death
  • Avoids probate
  • May avoid gift tax on the transfer (depending on the value of the remainder interest and the amount of your unused applicable exclusion amount)
  • Provides your beneficiaries with a stepped-up basis in the residence, in some cases

Key Tradeoffs

  • Transfer into irrevocable trust triggers ineligibility period
  • Loss of control
  • May be ineffective in an income-cap state
  • House may be subject to Medicaid estate recovery procedures

Variations from State to State

  • May be ineffective in income-cap states

How Is It Implemented?

  • Gather information about your income, assets, and transfers of same for the past five years
  • Consult with a Medicaid law attorney

This material was prepared by Broadridge Investor Communication Solutions, Inc., and does not necessarily represent the views of The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com,  access.att.com, ING Retirement, AT&T, Qwest, Chevron, Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, Merck, Pfizer, Verizon, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

The Retirement Group is a Registered Investment Advisor not affiliated with  FSC Securities and may be reached at www.theretirementgroup.com.

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