There are different types of trusts that are used for different purposes. One of the major distinctions between trusts is that some of them are revocable, and some of them are irrevocable. First, we will look at a common type of revocable trust called a revocable living trust, and we will then draw a contrast between this type of trust and a Medicaid/Medi-Cal trust.
Revocable Living Trusts
A revocable living trust is largely utilized as a tool to facilitate the avoidance of probate. When you pass away in direct possession of personal and/or real property, the property is looked upon as probate property at first. If you have a will, the executor will admit the will to probate. The probate court will subsequently supervise the administration of the estate.
There are a number of different drawbacks that go along with the probate process. The shortlist would be that probate is time-consuming, it can be costly, and it is a public proceeding.
When you create and fund a revocable living trust, the assets that have been conveyed into the trust are distributed by the trustee to the beneficiaries after you die in accordance with your wishes. These distributions are not subject to the probate process.
Because the trust is revocable, you don’t surrender incidents of ownership while you are living. You can rescind the trust entirely, change the terms, and act as the trustee and beneficiary throughout your life.
If you were to apply for Medicaid or Medi-Cal, assets that are contained within a revocable living trust would be counted, because you do in fact retain incidents of ownership.
Some people will create and fund a trust as part of a Medicaid or Medi-Cal plan. They want to divest themselves of personal ownership of assets prior to applying for Medi-Cal coverage. To clarify, Medi-Cal is a need-based health insurance program that many people use to pay for long-term care, since Medicare won’t cover long-term care costs.
The major difference between a revocable living trust and a Medicaid/Medi-Cal trust is the fact that a Medicaid/Medi-Cal trust is going to be irrevocable. You surrender incidents of ownership when you create an irrevocable trust. As a result, Medicaid or Medi-Cal evaluators who are determining your eligibility would not count assets that have been conveyed properly into this type of trust.
Download Our Free Medicaid/Medi-Cal Planning Report
We have prepared a special report takes an in-depth look at the rules and regulations that you must be aware of if you are interested in Medicaid or Medi-Cal coverage. This report is being offered on a complimentary basis, and you can gain access right now through this website. Simply follow this link to get your free copy of the report: Medi-Cal Planning Report.
- Community Shred Day 2022 (VIDEO) - May 11, 2022
- California Probate Thresholds (VIDEO) - April 29, 2022
- Interview with Dementia Counselor Tami Anastasia Part Three – Communication and Dementia (VIDEO) - April 27, 2022