What is a Medicaid trust?

A Medicaid trust is an estate planning tool that helps protect assets from being used to pay for medical expenses. In Texas, this type of trust can be used to protect assets and provide long-term care for a disabled person. A Medicaid trust is set up in the name of the disabled individual and the money is managed by a trustee. The trust is designed to provide financial support to the disabled individual, while also preserving their assets and protecting them from being used to pay for long-term care costs. The trust is funded by the disabled individual and all funds in the trust remain in the trust until the disabled individual passes away. At this point, the funds are transferred to the designated beneficiaries. When creating a Medicaid trust, there are various factors to consider such as the trustee’s responsibilities, the types of assets that can be held in the trust, and the tax implications. In Texas, there is a Medicaid Trust statute, which allows for trusts that are funded with the disabled individual’s own assets. These trusts can be used to protect the disabled individual’s assets and provide them with needed care and support. Additionally, the trust can protect the disabled individual’s assets from creditors and from Medicaid estate recovery. Since the money in a Medicaid trust is not counted as an asset when determining eligibility for Medicaid benefits, it can be a useful tool for those individuals with limited assets who need long-term care.

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