Understanding the Lookback Period for Medicaid Trusts

 Posted on July 20, 2024 in Estate Planning

One important but less discussed aspect of estate planning is something called a "lookback period," which is the time when financial transactions - particularly involving trusts - are scrutinized. This is done to determine Medicaid eligibility. If you are considering Medicaid planning, speak with a knowledgeable Flower Mound, TX estate planning lawyer to understand the implications of this lookback period.

How Do Medicaid Trusts Work?

Medicaid is a federal and state-funded program that provides healthcare benefits to eligible individuals with limited financial resources. To qualify for Medicaid’s long-term care benefits, applicants must prove that their financial situation necessitates them. They need to meet strict conditions, with any assets they own not exceeding a certain limitation.

What Does the Lookback Period Entail?

When you apply for Medicaid eligibility, the authorities are entitled to exercise a lookback period, which means they have access to review any asset transfers you made. This includes placing funds in a trust. If you have transferred any assets into a trust within the lookback period, it does not automatically disqualify you from Medicaid benefits, but the authorities will need to review the transfers. If it appears you transferred money out of your account so that it would appear you have less than you do in reality, your eligibility for Medicaid could be delayed.

Some people set up an irrevocable trust as part of their Medicaid planning. This is a good option in many cases because as soon as money is in an irrevocable trust, it is no longer considered your property. However, if the trust was set up during the lookback period, it can be scrutinized. If it is determined that you set it up for legitimate estate planning purposes, you can still qualify for Medicaid benefits.

How to Protect Your Medicaid Eligibility

Medicaid eligibility can be a complicated topic to understand. Because of the intricacies of trust law, it is always recommended to consult with a legal professional who has experience with these matters. Without a knowledgeable lawyer by your side, you might accidentally set up a trust that disqualifies you from the benefits you seek. One of the most important things you can do as you attempt to plan for your future is to consult with someone who can help ensure that your financial activity is all in compliance with Medicaid rules.

Contact a Denton County, TX Medicaid Planning Attorney

If you are ready to begin planning for your financial future, speak with an experienced Flower Mound, TX estate planning lawyer who can advise you on how to ensure you maintain your eligibility for the benefits you want. At Colbert Law Group PLLC, we help our clients make informed decisions about what to do with their assets to protect their best interests. Call us at 972-724-3338 so we can begin planning for your future.