Why A Spouse Does Not Require an Asset Protection Trust

Why is a Medicaid Asset Protection Attorney telling people to slow down when it comes to a Medicaid Asset Protection Trust for a spouse? The reason is because my goal is to help you protect assets in the most effective and least complicated way the law allows and in many cases that means not using an asset protection trust when one spouse is in a nursing home.

Not Every Trust Provides Asset Protection

Trusts are a popular topic and a lot of people are under the impression that there are some secret asset protection benefits that accompany every type of trust and that it is the only way to protect assets. Many people hear the word “trust” and they immediately think of it as some device to hide or protect assets. One of the most common types of trusts required for Medicaid eligibility in some cases has nothing to do with assets or asset protection. That type of trust is a Miller Trust. I have a bunch of articles on here about Miller Trusts if you want to know more, but for this topic all we need to be clear about is that a Miller Trust: 1) only holds income and 2) only helps Medicaid applicants that are over the $2,1999 gross monthly income limit. It does not hold assets (if it does you are creating a disaster waiting to happen) and it does not protect anything it contains. It’s only purpose is to allow someone that is over the Medicaid gross monthly income limit to be treated as though they are below the gross monthly income limit for eligibility purposes – that is all it does. Similarly, any variety of trust that the Medicaid applicant or his or her spouse has the power to revoke provides absolutely no asset protection when it comes to Medicaid.

Look at the Bottom Line

A healthy spouse at home also starts to wonder about and look at trusts as a way to protect their life savings from being consumed by their husband or wife’s nursing home bills. Looking to protect assets is a great idea that I completely support, but if you want it to be effective it has to be done right. When dealing with a spouse situation, there are usually much simpler and more effective alternatives. So stay focused on the bottom line when looking at any asset protection strategy which is this: “how much money am I going to save or protect by choosing this strategy?” I do not recommend getting caught up on one particular method of how that bottom line is achieved because if you go into the process with blinders on you might miss some worthwhile opportunities that could end up costing you money.

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