I found out something this week that surprised me immensely. Did you know that if you are on VA benefits, or need to qualify for need based benefits, you can put all of your property in an irrevocable trust so that it’s out of your name, and file and qualify for benefits the next day?
This came as a great surprise to me. Generally, when people try to hide or give away assets, they can’t just apply for financial aid benefits the next day. Let’s take Medicaid, for example. Before Medicaid will pay you any benefits, it will look back at everything you’ve transferred, given away, or spent in the last five years. That means you can’t exactly be a millionaire and give away all your assets, or put them in an irrevocable trust, and qualify for benefits the next day. This only make sense. If you can pay for your own long term care facility, you should have to do so. Medicaid should be left for those who truly can’t afford to live. If you plan way ahead, however, you can transfer assets into a trust or to anyone else as long as you do so five year in advance of needing Medicaid assistance. Of course, like with everything, there is a catch. Once you give away your property or put it in a trust, you can no longer be allowed to access the assets in the trust or receive and distributions from income of the trust. That is oftentimes enough to dissuade someone from doing so. What it would mean is basically giving up your good lifestyle, living as a pauper for five years, and then being able to qualify for benefits. Of course if you need long term care benefits within that five years Medicaid’s going to unwind the trust and make you use that money to live on.
As I stated earlier, this is not the case with the Veteran’s Administration. You can transfer property out of your name today and apply for long term care benefits tomorrow, and qualify to receive them. This is a great option available only to veterans.