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Can You Distribute Money in a Trust Without Affecting Medicaid Eligibility?

  • February 22nd, 2016
Q
Once you put your money in a trust, can you withdraw from it to gift to someone without incurring a Medicaid transfer penalty or without Medicaid’s five-year lookback period starting over on the rest of the money in the trust? We have had two conflicting answers from two elder care attorneys.
A

You are getting conflicting answers because the law itself is quite ambiguous. While it makes no sense that you would be double-penalized for putting money in trust –- first, when you deposit the money and, second, when it is distributed to a different beneficiary -– the law could be read that way. So, the question is what the Medicaid department is actually doing in your state. It would be a little odd that the distribution would cause a new lookback period for the money still in the trust, rather than the money being distributed, but state Medicaid agencies do strange things. So, in the end you need to go with the attorney you feel has the most current experience with your state Medicaid agency.

For more on Medicaid’s asset transfer rules, click here.

Local Elder Law Attorneys in Ashburn, VA

Margaret O'Reilly

Margaret A. O'Reilly, PC
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Last Modified: 02/22/2016

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