• Troyer & Good, PC

Long-Term Care Trusts – FAQ

Updated: Feb 12, 2019



What is the purpose of The Long Term Trust?


The purpose of the Long Term Trust is to protect the assets you place in the trust in the event that you need long term care in the future and need to rely on Medicaid for assistance.


What about Long Term Care insurance?


Many clients with Long Term Care insurance choose to create an Irrevocable Trust to add an extra layer of protection for their assets. Some people decide that a more affordable level of insurance coverage might work for them if they have the trust in place. The trust can also work if you do not have Long Term Care insurance.


How long until the Trust assets are protected?


After five years, the transfer of assets that you make to the Long Term Trust will no longer be part of Medicaid’s disclosure period.


Can I change the Long Term Trust?


No. The trust is not revocable. Once you create the terms of the trust, you cannot change them. You also cannot remove assets from the trust; however, the Trustee will distribute income to you each year.


Who will be the Trustee?


The Trustee is in charge of handling the trust and complying with its terms. You cannot be your own Trustee. Typically, you would name a family member, bank, or other corporate fiduciary to serve as Trustee.


Who is the Beneficiary of the Long Term Trust?


You are the sole income beneficiary as long as you are living. This means that you receive all of the interest, dividends, and other income that is earned by the trust. After you die, the trust will be distributed according to your wishes as stated in the trust document. Usually, these terms are the same as your Will.


How much goes into the Long Term Trust?


It is completely up to you to decide which assets to re-title to the Long Term Trust. You might even decide to fund the trust with a new asset such as a life insurance policy or an annuity. However, you do need to complete the funding as soon as possible after the trust is signed. The date the last asset is titled in the name of the trust is the date the five year waiting period will begin. Assets kept outside of the trust will not be sheltered.


Will there be a separate tax return for the Long Term Trust?


No. Because the trust is a grantor trust, all trust accounts will use your Social Security number during your lifetime, so there will not be a separate tax return. After you die, a new tax ID number will be assigned to the trust.


What kind of assets can be in the Long Term Trust?


The Long Term Trust can hold any asset that you choose. Real estate, annuities, life insurance, checking, savings, CDs, stocks, and bonds can all be titled in the trust. You do not necessarily have to change your financial situation or the nature of your particular investments – just the titles.


Will there be an annual legal fee for the Long Term Trust?


Not at our office. You pay a fixed fee for the creation of the Trust but do not pay regular ongoing attorney’s fees after that. Of course, there may be unique situations that arise in the future requiring additional legal services.


Can’t I protect my assets with a Revocable Trust?


No. Assets in a Revocable Trust are part of your countable resources because you have full access and control of them.


Can’t I protect my assets by putting my child’s name on my accounts?


No. Assets that are in a joint account are part of your countable resources because you can withdraw all of the money at any time.


What about making gifts?


The ability to make annual gifts ($14,000 per person per year) is a gift tax rule excluding those amounts form gift tax. Medicaid does not follow the gift tax rules. Gifts in excess of $1,200 per year (combined total) – whether to children or to charity – made within the five years prior to applying for Medicaid benefits will create a penalty period for you.


If you have more questions, schedule an appointment. Our attorneys can help answer questions that are unique to your situation. We can also help you create a Long Term Trust if you think you or a loved one could benefit from one.

Fort Wayne, Indiana attorneys offering services in estate planning, Wills, Trusts, estate and trust administration, probate, elder law, Medicaid, asset protection, and guardianship.

​© 2020 by Madyson Shannon