What are the rules for Medicaid trusts?

In Virginia, Medicaid trusts are governed by federal and state laws which regulate how an individual’s assets may be transferred to a trust in order to be eligible for Medicaid assistance. Under federal law, any trust created on or after August 11, 1993 must be an irrevocable trust. This means that the individual may not modify, revoke, or terminate the trust; nor can the individual transfer the assets out of the trust or receive distributions from the trust. To be eligible for Medicaid, the trust must be managed by a trustee and the assets in the trust must be used solely for the benefit of the beneficiary, whose income and resources will be used to calculate eligibility. Additionally, federal and state laws in Virginia also restrict the types of assets that may be placed in a Medicaid trust. These assets include cash, stocks, and other investments. The trust must contain a “payback clause” which states that the individual’s resources must be used to repay Medicaid after the individual’s death. In Virginia, an Elder Law Attorney can help individuals set up a legally compliant Medicaid trust that meets all the requirements for Medicaid eligibility. The attorney can provide expert advice as well as help with any paperwork or filing required to establish and maintain the trust.

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