Q: Is transferring money from a trust to caregiver account a thing to get approved for Medicaid?
I have looked all over internet and all I see is getting paid as a caregiver but not this caregiver account transfer.my husbands step dad says it is needed to avoid look back to get Medicaid. His attorneys told him to transfer trust into caregiver account under my husband and I. Eventually after she gets it at some point he said we will transfer it back to him?? Does this sound right to avoid look back or is he trying to move assets out of trust as my husband is 50% beneficiary of anything left in the future if anything is still not used? Also it requires both our socials and sensitive info so I want to be cautious. I didn’t know where to go to ask this as my father was an attorney and is no longer with us. He was usually my go to. Any assistance is so very much appreciated.
A: Please make sure that you are working with a knowledgeable Medicaid Planning/Elder Law Attorney. There is a contract called a Personal Services Contract that when executed properly allows a front loaded payment to a caregiver or care manager (usually a trusted family member) based on the actuarial life expectancy of the elder adult. When properly executed, this agreement avoids the penalty look back because the transfer of funds is not a gift. However, it does become income to the caregiver who should report the payment on their income tax return. Some family members do set the funds aside in case the elder adult has future needs that the personal needs allowance (the amount of income that the elder adult gets to keep after qualifying for Medicaid), but the funds become theirs once the funds are transferred under a proper agreement.
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