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Mother in Law and Lifetime Trust and Medicare
Old 03-11-2009, 04:33 PM   #1
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Mother in Law and Lifetime Trust and Medicare

Ok I am puzzled and a little embarrassed to inquire.. after reading this forum on the options associated with long term care and a"Lifetime Trust" My wife's mother (age 75) just inherited part of her mother's estate and it was set up in a "Lifetime Trust" with payments to be quarterly from the income and or added payments for health issues. She is not clear if this trust must be depleted in the event of long term care before medicare will help. Her estate trustee is not too forthcoming// If so any thoughts on better ways to protect it's principle for her children?

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Old 03-11-2009, 07:09 PM   #2
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I retired going on 3 years ago, but at that time Medicare was not means tested. I don't know if that has changed since then. You can call your local social security office and ask them if that has changed.

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Old 03-12-2009, 07:47 AM   #3
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You mean "Medicaid" not "Medicare," right? There are ways to navigate the Medicaid waters so I think it might be worth your mother-in-law's and wife's time and resources to consult a good elder care lawyer. For the most part, I think the income from this Lifetime Trust will be an asset or resource that will be counted for Medicaid eligibiilty; you should inquire with your counsel about whether this Trust would be recognized as a Qualified Income Trust for Medicaid purposes, in which case, the income might be distributed in such a fashion that it might not exceed disqualifying levels of income/resources for Medicaid purposes. Regarding the corpus/principle of the trust, what does the trust instrument say, I think is the short answer to your inquiry of whether the principle can be invaded by your mother-in-law (and thus Medicaid for resource counting)? If your mother-in-law has no claim to the principle, then it would stand that this can't be counted as a resource for Medicaid purposes.

Typically, the biggest asset that people need to take into account for purposes of leaving something to children is the house; you might have greater flexibility under Medicaid, depending on the State your mother-in-law resides, to deal with that asset in an appropriate fashion.
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