In this section: Dealing with the over income situation through an income trust. How income flows through an income trust. Two sample strategies to protect assets. The overriding goal behind every strategy to obtain eligibility is minimizing the time it takes to reach the specific eligibility requirement while maximizing the amount of assets removed from consideration by the government. Income Trusts While an income trust is not specifically related to protecting assets, it is an absolute necessity if your income is greater than the income cap. If you are in an income cap state, are over the income cap and want to have benefits paid in an income cap state you must have an Income Trust drafted, executed and properly funded, prior to application for benefits. Income Trusts are fairly simple in their concept. A trust is set up in order to divert income of the applicant to the trust in an amount great enough to reduce the income of the applicant below the cap. The income cap in the year 2004 in Florida is $1,972, if the applicant here is over the cap he is not eligible unless he puts that excess income into an income trust.So, for example, if the applicant has $1,702 in total gross monthly income, he will need to put $10.00 in the trust each month to bring the income at or below the cap amount. Now for the peculiar part; the total income of the applicant, with a few deductions for personal needs, is used to calculate what is known as the patient's responsibility. This patient's responsibility requires the applicant who has been granted benefits to pay his total income; $1,702 in the above example, to the nursing home as his contribution to the cost of his care. There is an obvious shortfall in this example of $10.00 which was sent to the income trust. The solution to this predicament is that the trust then pays the $10.00 from the income trust to the nursing home, making up the balance. Without the use of an income trust, eligibility can not be established; therefore, the income trust must be set up before the application process is begun. Additionally, it must be properly funded with the applicant's excess (over the cap) income. For example: $10.00 would go into the trust as diagramed below. If you do not transfer the excess income to the trust prior to, during the application process, and continue after, eligibility will be denied for those months that the trust did not receive the excess income. Asset Strategies Some, if not all your assets can be protected in some form prior to applying for benefits. The sooner you begin to plan, the more options you have available. We can protect assets by changing the character or location of those assets. Two examples of strategies are described below and are offered as examples only. They do not represent all the possible methods which can be used to save assets. Do not rely on these solutions nor should you apply them to your particular situation without first consulting with an experienced elder law attorney. In order to assure eligibility, the implementation of each particular strategy must be done correctly. One of the techniques is known as the transfer and wait technique. With enough lead time, you can transfer either a limited amount, and wait the period of time that the ineligibility period would be imposed, or transfer an unlimited amount of assets and wait the full 36 months before applying. Often there is not enough time or there is a limited amount of assets to be transferred. In such cases I often recommend the transformation of an asset from a countable asset into a non-countable asset. For instance; you may need to have some work done on your house. Any improvement paid for by countable cash assets is transformed into part of a non-countable asset, your home. There are many other legal strategies to assist the client in asset protection. Since every situation is different it is important to get qualified professional advice from an elder law attorney to accurately asses each individual situation. Lastly, it is always importabt to have the proper documents, such as a durable power of attorney, in place so that someone can act in your behalf if you cannot. If you do not implement this part of your plan when you have the capacity to do so; your entire strategy may be rendered completely ineffective.

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