How to make a Gift from a Castle Trust to avoid the five-year Medicaid look-back period?

How to make a Gift from a Castle Trust to avoid the five-year Medicaid look-back period? In this episode of Berry’s Bites, Chris Berry answers the question: How do I make a gift from a Castle Trust to avoid the five-year look-back period


Estate Attorney and Advisor Chris Berry of Castle Wealth Group answers questions on retirement and estate planning every Wednesday at 1pm. Register via thisĀ linkĀ or give our office a call at 844-885-4200.

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With the use of legal structures like revocable living trusts, Castle Trusts (asset protection trusts), Chris Berry and Castle Wealth Group can help your family plan, protect, and preserve what is important through their Retirement and Legacy Blueprint Process.

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Episode Transcript:


How do I make a gift from a Castle Trust to avoid the five-year lookback period?

Let’s say we have a married couple. Let’s say we have a husband and. And they gift assets to the Castle Trust. So what are the advantages of the Castle? Trust starts a five-year clock for long-term care slash Medicaid because Medicaid looks back five years to see if you move any money. And if you have then.

They’re going to penalize you. They’re going to say that’s divestment. And now even though otherwise you’d be qualified for Medicaid, they’re going to say you don’t qualify. So what you can do with the Castle Trust though, is once you move the money into the trust and let’s say five years go by, then what you could do is you could make gifts to beneficiaries if you wanted.

and because it was made from the castle trust, not from you, that means that it doesn’t restart that five-year clock because the five-year starts right here. When you move the money into the trust by moving the money into the trust, that’s what creates the five-year lookback period. So this is the most important.

It’s not when the trust was created, it’s when the money moves into the trust. So this is when the five years. , and then once you’ve made it the five years, then you can make whatever gifts you want and everything inside of the trust is protected. If you’re looking to make gifts and you don’t want it to trigger any type of divestment, penalties, or create any issues for long-term care or Medicaid, then it’s great to set up the Castle Trust, which starts that five-year clock.

It builds in that protection, and then once you’ve made five years, then you can gift to whatever listed beneficiaries in the. and if the beneficiaries aren’t listed, you could always make changes to the trust to add those people, those beneficiaries. So yes, you would just make the gift directly from the Castle Trust.

So question kind of continues. Would it be from the key holder account? The answer is a hard no. We want it directly from the trust because of the key holder account, if you do have a castle trust, remember it’s kinda like just a joint. So that means it touches your name again, and if it touches you, then it restarts the five-year clock.

But if it’s gifted directly from the trust, it does not restart the five-year clock. So very important. Don’t gift it from the key holder account. You would gift it directly from the trust.


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