Not many people like to think about getting older and becoming unable to take care of themselves. Unfortunately, the U.S. Department of Health and Human Services has said that a person turning 65 has around a 70 percent chance of requiring some form of long-term care for the rest of their lives. And this long-term care can end up being very expensive, with the only sources of funding being one’s own money, specific insurance and Medicaid.

Long-term care insurance requires advance planning and either setting aside a large amount of money or paying a hefty premium for a number of years. Not many New Jersey residents are likely to think that far in advance, which is why many find themselves turning to Medicaid for help.

Medicaid is a means-tested program. This means that qualifiers must have low-income and limited assets. It also requires that people spend their own money on long-term care insurance before becoming eligible for Medicaid. This means it affects senior citizens ability to protect the money and assets they intended to distribute to their loved ones. However, what many do not realize is that it is possible to engage in Medicaid planning to protect a loved one’s inheritance.

Asset protection trusts are one way to protect one’s wealth. Assets transferred into the trust no longer belong to the senior citizen and therefore out of the reach of Medicaid. Additionally, if a house is transferred to the trust, the creator can reserve the right to live in it forever and income can still be received from income-producing asset placed in the trust. However, the transfers are still subject to Medicaid’s Look Back period.

An income trust can also be a Medicaid planning tool. A qualified income trust is an irrevocable trust that can hold the applicant’s extra income and while a pooled trust functions similarly, it is designed specifically for disabled individuals.

There are many legal strategies people can utilize to qualify for Medicaid benefits. It might be beneficial to consult an experienced attorney for guidance on how to protect one’s assets while also taking into account one’s long term care.