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What You Should Know About Irrevocable Trusts and MassHealth

POSTED ON: January 4, 2021

elder woman looking up information on masshealth

No one likes to think about aging or needing assisted living services. However, the lifetime probability of becoming disabled in at least two activities of daily living or of being cognitively impaired is 68% for people age 65 and older. Therefore, many older adults seek some form of long-term care either through home-health services or nursing home facilities. 

With this in mind, planning for long-term care seems like a very good idea, and talking to an experienced Massachusetts estate planning attorney can provide you with the information you need. 

Massachusetts estate planning attorneys have expressed that long-term care affordability is among their clients’ top concerns. Specifically, how to balance personal wealth against qualifying for public aid. Irrevocable trusts offer a solution. Here’s what you should know about irrevocable trusts and MassHealth.

What Is MassHealth?

MassHealth, Medicaid in Massachusetts, is government-funded health insurance that supports long-term care. Strict income and asset regulations govern eligibility for MassHealth. Applicants with income or assets exceeding MassHealth guidelines will either need to spend down their wealth or restructure their estate to meet eligibility requirements. 

Navigating MassHealth’s rules and requirements on your own can feel overwhelming. Consult a skilled Massachusetts estate planning lawyer to determine if you qualify for aid under MassHealth guidelines, and if not, what steps you might take to become eligible. 

What if I Exceed MassHealth Income and Asset Requirements?

If your income and assets exceed MassHealth maximum requirements, you have a couple of options:

  1. Spend down your personal wealth to meet the income and asset requirements for public aid. A common way to do this is to spend money on medical care.
  2. Establish an irrevocable trust to shelter your assets and meet eligibility restrictions. An irrevocable Medicaid/MassHealth trust provides an opportunity to protect your estate while helping you qualify for MassHealth. However, the trust must be drafted appropriately to safeguard your assets against MassHealth. 

Working with a qualified estate planning attorney to create your trust can reassure you that your assets are protected.  

What Is an Irrevocable Trust?

An irrevocable trust is an estate planning tool that offers asset protection against taxes and creditors while also protecting your eligibility for certain government benefits.

The assets in an irrevocable trust are considered non-countable for purposes of qualifying for MassHealth benefits since:

  1. The trust is irrevocable. Once assets are transferred into trust ownership, they may not be removed or returned to the grantor.
  2. The terms of the trust agreement are permanent and may not be changed.
  3. The grantor assigns a trustee to oversee the trust, relinquishing management of the trust to the trustee. 
  4. The trust must have been established and funded for five years before applying for MassHealth. This is due to the five-year-look-back period. 

What Is the Five-Year-Look-Back Rule for MassHealth?

It’s common for people to be denied MassHealth eligibility because they never considered the five-year-look-back period. To be eligible for MassHealth, you can’t exceed MassHealth asset or income limits. If you apply to MassHealth with assets or income over the limits, you’ll be required to spend down to the applicable limits. But you can’t intentionally just give away assets or sell them for less than fair market value in an attempt to be eligible for MassHealth.  

In an effort to prevent MassHealth applicants from manipulating their income and assets to meet eligibility criteria, MassHealth reviews all transfers of assets made by an applicant 60 months before their application date. If they discover a transfer of assets during this period, whether to a trust or to another person, they’ll impose a disqualification period on the applicant’s eligibility (a length of time the applicant won’t be eligible for MassHealth). 

The five-year-look-back rule underscores the importance of advance, comprehensive estate planning with an experienced Massachusetts estate planning attorney. 

Contact the Legal Team at The Heritage Law Center About Irrevocable Trusts and MassHealth

Whether you have an existing estate plan or are considering one for the first time, it’s worth including some planning for long-term care. To learn more about incorporating long-term care provisions into your estate plan, contact our office today. When you do, you’ll be partnered with a knowledgeable Massachusetts estate planning attorney well-versed in irrevocable trusts and MassHealth. 

After a thorough discussion and understanding of your financial assets, family dynamics, and estate planning objectives, we’ll develop a sound and comprehensive plan tailored to your needs. 

Contact us today at or call us at 617.299.6976.