The Listen to Lawrence Letter: Irrevocable Trusts and Medicaid

July 15, 2021
Dear Clients and Friends,
When you are thinking about how much you wish to put into an irrevocable Medicaid trust (to protect assets from Medicaid), the best question is not how much to put into it but rather how much you want to keep in your name in order to keep your independence and dignity. However, the amount you leave out of the trust will prompt questions like this one:
In December 2014 I set up an irrevocable trust with your firm naming my son as trustee. Since then I have set up a joint checking and savings account with my son. If I apply for Medicaid or enter a nursing home will the account be subject to the amount of assets that I am allowed to keep? Currently, there is a combined amount of $52,000.
First, congratulations on completing your five-year look-back for the assets in the trust! Those assets are all now protected. The $52,000 that remains in your name is not protected, although you are allowed $15,900 in any event and can protect more if you prepay your funeral expenses.  Please note that the entire $52,000 will be considered your asset; the fact that your son is joint on the account DOES NOT mean that the ½ in his name is protected.
It seems to me, however, that keeping this amount in a joint account is a modest amount to keep out of the trust to ensure your independence. The good thing about having the account joint, though, is that your son will have easy access to the account and it will avoid probate upon your death.
Sounds to me like you are in good shape even if a small part of your assets are exposed. Food for thought! 😊
I hope this helps! Please forward this information to your friends and relatives to share these informative answers to some very commonly asked questions.
And, if anyone you know would like to receive this
Listen to Lawrence Letter, just have them email me at and I’ll add them to the list!
As always, please send me your questions. If you are thinking about it, others are probably too, so my answers will no doubt help you and many others.
Let’s stay connected.
Stay safe!
Until next time…
peace, health and happiness
Lawrence Eric Davidow