When To Put an Insurance Policy Into The Trust

When To Put an Insurance Policy Into The Trust

Some have rather larger insurance policies with significant cash value, intending to keep those policies in effect for the death benefit. When applying for Medicaid for nursing home coverage, the state will count the value of those policies against that one can keep. Sometimes the value of the policies exceeds the Medicaid amount, or uses up a large portion so that very little other assets can be retained. If the policies are transferred to the trust, then after the five year look back their cash value will no longer be counted by Medicaid. Like the residence and other real property, life insurance policies with cash value that one intended to keep for the death are among the best assets to transfer to the trust. Do not transfer life insurance policies into a trust. Generally, life insurance proceeds received as a beneficiary aren't included in gross income; however, any interest received is taxable.