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Using a trust to protect your house

On Behalf of | Apr 2, 2024 | Estate Planning

As the cost of healthcare continues to rise, some state Medicaid offices are taking measures to recoup expenses, including targeting the assets of deceased individuals. One asset the agency sometimes takes such actions against is the family home.

There are ways to protect your house from such claims, one of which involves setting up a trust.

Understanding the issue

State Medicaid offices seek to recover healthcare costs from the estates of deceased Medicaid recipients. Normally a person’s home is not an asset they can take to recoup expenses. Medicaid states that for individuals 55 and over who require high-cost surgery, drugs, medical care, or long-term hospital or nursing home stays, that person’s home is fair game. This includes placing liens on properties, which can lead to the forced sale of homes to cover outstanding bills. For families inheriting a home, this can be devastating.

Using a trust to protect your home

One effective way to safeguard your house from Medicaid claims is by placing it within a trust. A trust is a legal arrangement where one party, the trustee, holds assets on behalf of another party, the beneficiary. By transferring ownership of the house to the trust, it no longer forms part of the estate subject to Medicaid recovery.

How it works

When you establish a trust, you effectively remove ownership of the house from your name and transfer it to the trust entity. As a result, when you pass away, the house does not go through probate and is not part of your estate. Since Medicaid recovery typically targets assets within the estate, the trust shields the house from such claims.

Other benefits of using a trust

Besides protecting your house from Medicaid claims, using a trust offers several other advantages. It allows for the efficient transfer of assets to your beneficiaries without the delays and expenses associated with probate. Additionally, it provides privacy as the details of the trust remain confidential, unlike a will, which becomes a matter of public record upon probate.

A family home should remain with the family. Protect your house from any entity that could potentially take it from you or your heirs.