Qualified Income Trusts and Medicaid Planning

Estate planning is an essential process for individuals and families to ensure their financial affairs are in order and their loved ones are taken care of after they’re gone. One essential aspect of estate planning that cannot be overlooked is planning for long-term care. There may come a time when an individual requires long-term care in an assisted living facility or nursing home, where the costs can exceed $100,000 a year for a private room and nearly $90,000 for a semi-private room.

For many people, such essential care is simply unaffordable without the help of Medicaid to pay for the costs. Although Medicaid is needs-based, it’s not just a program for poor people who can’t afford quality care. With proper estate planning, you can qualify for Medicaid without going broke in the process, and Medicaid can help you get long-term care in a quality facility where your needs will be met by attentive, qualified staff.

One important tool in this area is the Qualified Income Trust (QIT), also known as a Miller Trust. In this post, we’ll explore what a Qualified Income Trust is, who can benefit from it, and how it can be integrated into a comprehensive estate plan. For assistance qualifying for Medicaid or learning more about how long-term care planning fits in with your overall estate plan, contact Shalloway & Shalloway in West Palm Beach to speak with a Florida board-certified elder law attorney.

What Is a Qualified Income Trust?

A Qualified Income Trust (QIT) is a legal arrangement used to manage income for individuals who need long-term care services, such as those provided by Medicaid. It’s designed to help individuals whose income exceeds the eligibility limits for Medicaid to still qualify for the program. The trust is irrevocable, meaning once it’s established, the terms cannot be easily changed.

The primary function of a QIT is to hold the income of the Medicaid applicant, such as Social Security, pensions, or other sources of income that are over the income limit for Medicaid eligibility (currently $2,829 per month). The funds in the trust are then used to pay for the individual’s share of their medical expenses, with the remaining amount going toward their personal needs allowance, and any other approved expenses.

Who Can Benefit from a Qualified Income Trust?

Qualified Income Trusts are particularly beneficial for individuals who require long-term care, such as nursing home care, but have income levels that exceed the Medicaid eligibility threshold. By setting up a QIT, these individuals can legally reduce their countable income to qualify for Medicaid, ensuring they receive the necessary care without depleting their life savings.

It’s important to note that QITs are not suitable for everyone. They are specifically designed for individuals needing long-term care and facing Medicaid eligibility issues due to their income levels. Consulting with an experienced estate planning attorney is crucial to determine if a QIT is the right option for your situation.

Integrating a Qualified Income Trust into Your Estate Plan

Incorporating a Qualified Income Trust into your estate plan requires careful consideration and planning. Here are some steps to consider:

1. Assess Eligibility: Work with an estate planning attorney to determine if you or your loved one is suited for a QIT based on income levels and the need for long-term care.
2. Establish the Trust: If a QIT is suitable, an attorney can help you set up the trust, draft the trust agreement, and ensure it meets all legal requirements.
3. Manage Income: Once the trust is established, income that would otherwise disqualify you from Medicaid eligibility will be directed into the trust. This income will be used to cover medical expenses and other approved costs.
4. Review and Update: Regularly review your estate plan, including your QIT, to ensure it continues to meet your needs and complies with any changes in Medicaid regulations.
5. Coordinate with Other Estate Planning Tools: Ensure that your QIT works in harmony with other components of your estate plan, such as your will, power of attorney, and healthcare directives.

Contact Shalloway & Shalloway for Help With Elder Law and Medicaid Planning in West Palm Beach

Qualified Income Trusts are a valuable tool in estate planning, especially for individuals who may need long-term care but are at risk of exceeding Medicaid income limits. By effectively managing income through a QIT, individuals can maintain their eligibility for Medicaid while ensuring their long-term care needs are met. However, it’s important to consult with an experienced estate planning attorney to determine if a QIT is right for you and to ensure it’s properly integrated into your comprehensive estate plan. At Shalloway & Shalloway, P.A., our team is dedicated to helping clients navigate the complexities of estate planning and Medicaid eligibility. Call us today at 561-686-6200 to learn more about how a Qualified Income Trust can fit into your estate plan.