A Medicaid Irrevocable Trust is a specific type of trust used to protect a person's assets so they can qualify for Medicaid. It is designed to protect a person’s assets from being counted for Medicaid eligibility purposes. When assets are placed into this type of trust, they are no longer considered to be owned by the person who established the trust (known as the grantor). Instead, they are owned by the trust itself.

In simple terms, when assets are placed into an irrevocable trust, they are no longer considered to be owned by the person (the grantor) who established the trust. Instead, they are owned by the trust itself. As a result, the assets would not be counted by Medicaid when determining the grantor's eligibility for benefits. Once assets are transferred into the trust, they are no longer considered the property of the grantor. This means that when Medicaid is determining the grantor's eligibility for benefits, these assets aren't counted as part of the grantor's wealth.

A Medicaid Irrevocable Trust works by transferring ownership of a person's assets from the individual (the grantor) to the trust itself. The assets in the trust are managed by a trustee, who is typically a trusted friend, family member, or professional fiduciary. The trustee has a legal obligation to manage the assets in the best interests of the trust's beneficiaries according to the terms set out in the trust agreement.

The term "irrevocable" means that, once the trust is established and assets are transferred into it, the trust cannot be altered or cancelled without the consent of the trust's beneficiaries. This ensures that the assets within the trust are permanently removed from the grantor's estate and cannot be reclaimed, thus preserving the grantor's eligibility for Medicaid. This is in contrast to a revocable trust, which can be changed or cancelled by the grantor at any time.

The key feature of a Medicaid irrevocable trust is that it protects assets while helping individuals qualify for Medicaid coverage for long-term healthcare needs. However, there is an important timing issue to consider. Medicaid has a five-year 'look-back' period, which means it checks if the grantor has transferred assets for less than market value in the five years prior to applying for Medicaid. If such transfers are found, it can result in a period of ineligibility for Medicaid benefits. Therefore, the trust should ideally be established and assets transferred into it more than five years before applying for Medicaid.

As the rules governing Medicaid Irrevocable Trusts are complex and vary from state to state, it's essential to work with an experienced elder law attorney when setting up a Medicaid Irrevocable Trust.