When one spouse needs to enter a nursing home, the costs can overwhelm a couple’s finances. These expenses can quickly drain assets, potentially leading to the loss of their home. However, a spousal protection trust offers a safeguard against this financial burden.
Protecting the home from Medicaid recovery
Medicaid often covers nursing home costs, but it has strict financial eligibility requirements. To qualify, couples may need to spend down their assets, including their home. Placing the home in a spousal protection trust shields it from Medicaid’s asset calculations.
However, timing is critical when establishing a spousal protection trust. Medicaid has a five-year look-back period, which means that you must make any transfers to the trust at least five years before applying for Medicaid benefits to avoid penalties. The trust must be irrevocable, meaning one cannot alter or dissolve it once established, to meet Medicaid’s criteria.
Ensuring financial stability for the non-institutionalized spouse
A spousal protection trust allows the healthy spouse to retain control over any assets placed in the trust. This ensures they have the financial resources needed to maintain their standard of living while their spouse resides in a nursing home.
Preserving the family’s estate for future generations
A spousal protection trust helps the couple preserve their home and other assets for their children or other heirs. This trust structure prevents the sale of the home to pay for nursing home care, ensuring that it remains within the family, potentially benefiting future generations.
The long-term benefits of a spousal protection trust
A spousal protection trust safeguards the family home from Medicaid recovery and provides financial stability for the non-institutionalized spouse. Understanding these benefits empowers couples to make informed decisions about their future.