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Understanding the Under-65 Trust: A Guide for Medicaid Recipients
Definition & Meaning
An under-65 trust is a type of trust specifically created for the benefit of individuals who are under the age of 65 and are recipients of Medicaid. These trusts are established to help manage assets while ensuring that they do not count against the beneficiary's eligibility for Medicaid. Importantly, individuals who are not beneficiaries of the trust can set it up. While the beneficiary can receive distributions from the trust during their lifetime, any remaining funds in the trust must be used to repay the state for Medicaid expenses incurred on behalf of the beneficiary.
Table of content
Legal Use & context
Under-65 trusts are primarily used in the context of Medicaid planning. They fall under the broader category of estate planning and elder law. These trusts allow individuals to preserve their assets while still qualifying for necessary government assistance. Legal professionals often assist clients in setting up these trusts to ensure compliance with Medicaid regulations. Users can manage some aspects of this process themselves using legal templates available through services like US Legal Forms.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
(hypothetical example) John, a 60-year-old Medicaid recipient, has a modest amount of savings. His family sets up an under-65 trust to protect these assets while ensuring he remains eligible for Medicaid. The trust allows John to receive funds for his care while preserving his savings for future use.
(hypothetical example) Sarah, a 62-year-old with significant medical expenses, benefits from an under-65 trust established by her sibling. This trust helps Sarah manage her assets without jeopardizing her Medicaid eligibility, ensuring she receives necessary healthcare services.
State-by-state differences
Examples of state differences (not exhaustive)
State
Key Differences
California
Allows for more flexible trust structures.
New York
Specific regulations on trust distributions apply.
Florida
Trusts must comply with state Medicaid rules.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Differences
Special Needs Trust
A trust designed to benefit individuals with disabilities without affecting their eligibility for government benefits.
Under-65 trusts are specifically for Medicaid recipients under 65, while special needs trusts can apply to individuals of any age with disabilities.
Revocable Trust
A trust that can be altered or revoked by the grantor during their lifetime.
Under-65 trusts are typically irrevocable and specifically structured to comply with Medicaid regulations.
Common misunderstandings
What to do if this term applies to you
If you think an under-65 trust may be beneficial for your situation, consider the following steps:
Consult with a legal professional who specializes in estate planning and Medicaid law to understand your options.
Explore US Legal Forms for templates that can help you create an under-65 trust.
Gather necessary financial information and documents to facilitate the trust establishment process.
For complex situations, professional legal assistance is highly recommended to ensure compliance with all regulations.
Find the legal form that fits your case
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