When I meet with a client and determine that a Medicaid or Irrevocable Income Only Trust is the right move for them I am usually asked the same questions, here’s a brief list of some of the questions:
I’m a senior who gets preferential tax exemptions on my home, do I get to keep them?
The answer is yes. A well drafted IIOT trust will allow the Settlor or Grantor of the trust to not only remain in his or home, but keep their senior citizen, disability, veterans and STAR exemptions. This is an important factor to consider for the usual client because these tax savings can sometimes be considerable depending on the timing of when the property is placed into the trust.
If I put my home into the Irrevocable Income Only Trust or Medicaid Trust, can the Trustee kick me out of my home?
The answer is no. The Settlor or Grantor shall have the right to occupy their home placed in trust for residential purposes.
If I put my home into the Irrevocable Income Only Trust or Medicaid Trust, do I have to pay rent to the trust?
The Settlor or Grantor of the trust does not have to pay rent to the trust.
Who pays the taxes, insurance, assessments, repairs and other charges necessary to maintain my home?
The Settlor or Grantor still pays these charges as they have in the past. In this specific regard, nothing changes from how things were done before the home and/or assets were placed in the trust.
What does Income Only really mean?
Income only means that the Settlor or Grantor of the trust is entitled to income, if any, of the money or property placed into the trust. For example, if only cash was placed in a the trust and the trustee hired a money manager to make 5% on that money, then the Settlor or Grantor of the trust would be entitled to those percentages gains every year, less the money manager’s fee.
What is the Medicaid look-back period in NY and how does it apply to a NY Irrevocable Income Only Trust?
One of the benefits of an IIOT is that it begins the “5 year look-back” period for Medicaid. So, if there is a possibility that the Grantor or Settlor has the potential to go into a nursing home at some point in the future, and that period ends up being after the 5 years any assets or property were transferred into the trust, than those assets or property would be safe from any possible Medicaid liens.
