Estate planning can be about more than just leaving certain assets to beneficiaries. Medicaid planning is an important part of planning for the future of many people, and yet it’s often not seriously considered. For instance, taking advantage of certain Medicaid benefits down the road may be advantageous but, if your income levels aren’t managed properly before that day comes, you can find yourself unable to qualify for those services.
What is a Qualified Income Trust?
Qualified Income Trusts (QIT) are sometimes referred to as Miller Trusts. They are a type of trust targeted to those New Jersey residents who may need long-term care from Medicaid. Not every Medicaid recipient can use a QIT – it is only available to those who receive services under New Jersey’s Managed Long Term Services and Supports program.
The problem is that a person may not be able to afford the long-term care they will need, but they also make too much money to qualify for Medicaid. Fundamentally, a QIT allows this individual to divert the portion of their income which exceeds the Medicaid threshold, thereby making them eligible for Medicaid. These excess funds, via the trust, are used to share in the costs of future care.
There are many conditions which must be met when setting up a QIT. It is a complicated aspect of estate planning and mistakes can be costly. For instance, the trust funds can only come from the individual’s income, not from selling off assets or from savings accounts. The trust must be irrevocable and a trustee has to be named to manage it. And New Jersey must be the first beneficiary of any funds remaining following the death of the trust creator.
But with the assistance of an experienced professional, a well-designed QIT can position you take advantage of Medicaid’s long-term care benefits, so that your future is secure.