What are the rules for Medicaid trusts?

Medicaid trusts are financial vehicles used by disabled or elderly individuals to protect assets while still maintaining Medicaid eligibility. In Washington, there are strict rules governing these trusts. To set up a Medicaid trust, the person setting it up must be disabled or 65 years old or over. The trust must be irrevocable, meaning it is unable to be revoked or changed once set in place. All assets transferred to the trust must be for the purpose of providing for the disabled individual’s medical or support needs. These asset transfers must also be done at least five years before the individual applies for Medicaid. The trust also must name a trustee who is responsible for managing the funds in the trust. The trustee must be an individual or organization and must be independent from the beneficiary. The trustee is responsible for using the funds for medical expenses, costs of living, or other approved expenses. The trust must also specify that the state must be the primary beneficiary of the trust’s assets when the beneficiary passes away or no longer needs care. After that, the state must be reimbursed for all Medicaid benefits that were provided to the beneficiary. Finally, the trust must include language that specifies that trust assets cannot be used as a substitute for Medicaid benefits and that any money remaining in the trust after the beneficiary’s death will pass to their heirs or beneficiaries as outlined in the trust document.

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What are the rules for Medicaid trusts?

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