Q: Tax question for Medi-Cal Qualifying Trust in California
For an irrevocable trust where the grantor is NOT a beneficiary, if the trust is set up so all the income goes to the beneficiary, and not the grantor, who is trying to qualifying for Medi-Cal, does that mean the beneficiaries have to pay personal income tax on that income?
A: These types of irrevocable trusts are typically set up as "grantor" trusts which means that they remain under the Social Security number of your mother and the income is taxed to her. I hope this is not something you are trying to set up yourself as they are typically only prepared by qualified Elder Law attorneys. As well, if she does not need to immediately qualify for long term care Medi-Cal benefits, an irrevocable trust may not even be needed as in California we have many different strategies we can utilize when that need arises.
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