Santa Fe Medicaid Trust Lawyer

Medicaid Long Term Services and Supports (LTSS) can cover the costs of nursing home care or a caregiver in the home. This coverage is only available to individuals who meet the program’s income and asset limits. These limits are, by design, extremely low. The program is intended only for those who would have no other way to pay for their care.

Forming a trust can, in many cases, help you qualify for these programs even if you do not currently meet Medicaid’s income and/or asset limits. There are two types of Medicaid trusts, in fact: one for assets, and one for income. Both are useful only in certain situations — and only when used in a way that complies with all program rules. To determine if they might be part of a useful strategy, you can speak with an experienced Santa Fe Medicaid trust lawyer.

New Mexico Financial & Estate Planning Attorneys has assisted people in Santa Fe and throughout the state for decades. With our help, clients have been able to achieve their goal of qualifying for Medicaid. While we cannot guarantee program eligibility, we can offer you the full extent of our knowledge, experience, and resources to give you every chance possible to succeed in your objectives.

Find out more about how a Medicaid trust could benefit you during a no-obligation case review. Call us at (505) 503-1637 or contact us online to schedule an appointment today.

When Should I Reach out to a Santa Fe Medicaid Trust Attorney?

Medicaid programs are operated independently by each state. They provide care coverage for those who otherwise couldn’t afford it.

If you are interested in qualifying for Medicaid, you must be able to demonstrate financial need. New Mexico, along with all the other states, has strict income requirements for all types of Medicaid coverage. Certain programs, including Medicaid Long Term Services and Supports (LTSS), also have limits on the total value of resources (AKA assets) you can own.

It may be in your best interests to discuss your eligibility with a Santa Fe Medicaid trust attorney if you are in one or both of the following situations:

1. You need Medicaid long-term care coverage now, but the total value of all the countable assets you own or the income you earn exceeds the resource requirements for the program you want to use.  Countable assets can include the value of a life insurance policy, real estate, retirement and investment accounts, cash deposits, certificates of deposit, and vehicles. Income refers to all pensions, Social Security benefits, wages, salaries, dividends, annuities, property income, retirement account withdrawals, alimony, and other money you receive directly.
2. You think you might need Medicaid long-term care coverage in the future, and you want to preserve assets for your loved ones to inherit. Note that these actions must be taken at least five years before you think you may need Medicaid benefits.

Personalized Guidance and Assistance With Medicaid Trust Formation

When you meet with a Santa Fe trusts attorney, they will first listen closely as you describe your situation. They will want to know about:

• The assets you own
• The income you receive
• Any income or assets that could be considered yours, either partially or totally
• What your general care needs might be (both now and in the future)
• What types of Medicaid you think you might need
• Any coverage or medical support you have now, including Medicare and family assistance
• What risks you want to avoid, and what scenarios you want to plan for
• Any other estate plans you have made, including arrangements for a funeral and burial

Your attorney can then review your options for Medicaid planning. These plans might include the creation of a trust, a spend-down, or other methods that can be used to help you qualify for the programs you need.

Your Santa Fe estate planning lawyer may also be able to help you preserve assets for future generations if you think you won’t need to rely on Medicaid for at least five years into the future.

Having these conversations ensures that you are aware of all your options, including how each could help you achieve your goals. Your attorney will also discuss the rules, limitations, and possible drawbacks each strategy offers.

With this information in hand, you can make the right decision for your unique situation. Then, with your lawyer’s help, you can carry out your plan to form a trust — or use other strategies to qualify for the programs you’ll need.

What Types of Medicaid Programs Require a Trust?

A Medicaid trust would only be “required” in the sense that you may be unable to qualify for long-term care coverage without one.

There are three main types of long-term care coverage that could be needed:

• Nursing Home (Institutional) Medicaid — This coverage pays for the costs of nursing care or other care provided in a skilled nursing facility. It includes the price of room and board along with personal care assistance, prescription medications, physician’s care, mental health counseling, and social programs offered by the facility.
• Home and Community-Based Services (HCBS) Waivers — This type of long-term care is provided in the recipient’s home or community, rather than in an institution. Qualified recipients must meet a “Nursing facility level of care,” meaning they require assistance with two or more “activities of daily living.”
• Medicaid for the Aged, Blind, and Disabled (ABD) — These programs offer extended coverage for medical services to eligible recipients, such as dental and eye care.

Crucially, know that any long-term services and supports coverage provided by Medicaid does come with an eventual cost: estate recovery. After the care recipient passes, their remaining assets are claimed by the state to recover the costs of providing coverage, with limited exceptions.

The remaining value of certain trusts, including a special needs trust and an income diversion trust, may also be distributed to the state as a final beneficiary.

Types of Medicaid Trusts to Consider Creating With a Santa Fe Lawyer

There are two main types of trusts that could be described as a “Medicaid trust”:

• Medicaid asset protection trust (MAPT) — These trusts can remove assets from your countable resources as well as the reach of estate recovery actions, provided they are formed before the applicable programs’ 60-month lookback period.
• Income diversion trust — Also known as a qualified income trust (QIT) or Miller trust, these trusts divert income to the trust rather than the Medicaid applicant/recipient. They operate similarly to a special needs trust (SNT), including the requirement that the state is listed as the final beneficiary of all remaining funds.

To clarify: a Medicaid asset protection trust is used for Medicaid planning for the future. This means that the person forming the trust anticipates a likely need for Medicaid coverage, one that would not occur for at least 60 months from the date of the trust’s creation.

An income diversion trust, on the other hand, effectively reduces the amount of income the Medicaid applicant receives so that they may be able qualify for a program now.

The type of trust you may want to use, therefore, depends on your current needs and the programs you intend to use. Discuss your plans with an experienced Medicaid trust lawyer in Santa Fe to learn more. They will help you understand when certain trusts might be appropriate and how you can use them to your advantage.

How Does a Medicaid Asset Protection Trust (MAPT) Work?

Medicaid asset protection trusts have the following key characteristics:

• The trust’s creator (known as the grantor, settlor, or trustor) transfers ownership of most or all of their countable assets into the ownership of the trust.
• The trust is irrevocable, meaning that it cannot be altered or dissolved after it has been created.
• Someone other than the grantor or their spouse must serve as a trustee, meaning they are responsible for managing the trust and its assets
• The grantor must list someone other than themself as the beneficiary (or beneficiaries), and the beneficiaries can only receive their distribution after the grantor passes

These requirements make it so that the grantor loses all access to the trust’s contents once it is created. Practically speaking, they are setting aside inheritances for their survivors in advance.

Because the trust is irrevocable, there’s no way to change or dissolve it after it is created — even if the grantor is still unable to qualify for Medicaid. This risk should be carefully considered and balanced with your expected need for Medicaid.

How Does an Income Diversion Trust Work?

An income diversion trust acts similarly to a Medicaid asset protection trust, except it can only contain income that would otherwise be received by the grantor.

Like a MAPT, the grantor relinquishes all right to the assets transferred to the trust, albeit with very limited exceptions. In addition, the trustee must be someone other than the grantor.

Unlike a MAPT, there are no rules forbidding the grantor’s spouse from serving as a trustee. However, this arrangement can create complications for the Medicaid recipient — especially if the spouse later needs to qualify for Medicaid assistance, too. Accordingly, it makes sense to name another party, such as an adult child or other family member, as the trustee.

The final beneficiary of an income diversion trust must be the state of New Mexico. This requirement makes it a “reversionary trust.”

Like a special needs trust, the funds in an income diversion trust can be used to pay for qualifying, necessary expenses. Per New Mexico Code (8.281.510.11 (C) NMAC):

The only permissible distributions from the trust are: personal needs allowance, medical insurance (i.e. Medicare), trustee fees, administration fees, the medical care credit, and, if applicable, the community spouse monthly income allowance and family allowance.

The personal needs allowance as of January 2025 was $94. The minimum monthly needs allowance (MMNA) for the recipient’s spouse can be between $2,643 – $3,948, depending on the cost of shelter.

How Much Can I Have or Earn and Still Qualify for Medicaid LTSS in Santa Fe?

Applicants for Medicaid LTSS in New Mexico have both a total resource limit and a monthly income limit. These limits change each year, according to the expected cost of living and the impact of inflation.

The following information provided is current as of December, 2025.

Single (Unmarried) Applicants

Single applicants for nursing home and HCBS Medicaid are subject to the following limits:

• Countable resources: $2,000
• Income: $2,982

Married Couples, Both Applying

Married applicants who are both seeking nursing home and HCBS Medicaid can have the following income and assets:

• Countable resources: $4,000
• Combined income: $5,964

In-Community Spouse (Only One Spouse Applying)

When only one spouse is applying for Medicaid coverage, their other spouse can keep certain resources and income without disqualifying them for the program.

• Countable resources: $162,660
• Income: Not counted

Aged, Blind, and Disabled (ABD) Medicaid Applicants

An applicant seeking coverage for extended services as part of ABD Medicaid is subject to the following limitations:

• Countable resources (unmarried): $2,000
• Countable resources (married): $3,000
• Income (unmarried): $994
• Combined income (married): $1,491

Note that the combined income and asset limits apply regardless of whether one or both spouses are applying for ABD coverage.

Other Factors to Be Aware of When Applying to Medicaid

There are a few other important things to know when making decisions about Medicaid planning.

Your Primary Residence May Be Exempt From Your Countable Resources

The equity in your home (up to $752,000) may not be counted if:

• You continue to live in the home while receiving in-community supports
• Your spouse, child under 21, or a child of any age who is blind or disabled lives in the home
• You have an “intent to return,” which means that you would return to the house if you are medically able to do so after receiving nursing care (even if it is unlikely that you would ever recover to the point of being discharged)

You Can “Spend Down” Resources Instead of Creating a Medicaid Asset Protection Trust

If you need services before the 60-month lookback period lapses, or you are not concerned with preserving resources for heirs, then you have the option to instead spend that money on your spouse and yourself.

You could, for example, pay down debt, improve your home, buy medical equipment, or even take a vacation with the funds. You cannot, however, spend this money on other people, as this would qualify as a gift below market value for the purposes of determining eligibility during the lookback period.

You Can Create an Irrevocable Funeral Trust or Medicaid Compliant Annuity

These two strategies can both be used during the lookback period without affecting eligibility. You can learn more about each when you speak with a Santa Fe Medicaid trust attorney.

Get Help Planning or Qualifying From an Experienced Santa Fe Medicaid Trust Lawyer

New Mexico Financial & Estate Planning Attorneys can help you understand all of the complex criteria for Medicaid programs. They can also explain what you may be able to do to help you qualify.

As you can see, there are many options to consider — along with plenty of rules, limitations, and risks to be aware of. No matter what you decide, your actions are likely to affect your estate and your ability to receive necessary care for the rest of your life. Get help making the right choice when you call (505) 503-1637 or contact our firm online to discuss your case with an experienced Medicaid trust attorney in Santa Fe.