Irrevocable trusts continue to be useful to protect assets from having to be spent down on care prior to qualifying for Medicaid. Income-only trusts and no-income trusts combined with Life Estates can work.
Advance Planning requires thinking ahead regarding the elements of a sound plan: possibly purchasing traditional or hybrid long term care insurance policies, making arrangements to age-in-place or opt for assisted living, and deciding whether to protect some portion of one’s assets from having to be spent on long term care, which is not covered by Medicare.
Irrevocable Trusts are often used to give up access to one’s own home, investments or cash in order to protect them from having to be spent down before qualifying for Medicaid. After a look-back period of 5 years, such transfers are usually exempt, provided the trusts and transfers are handled properly – and the law does not change in the meantime.
There is a rise in the consideration of trusts created by children for the benefit of parents. One tool, the Family Health Trust, allows families to use their combined resources – often gifted earlier from the parents – as a backup tool to fill gaps in health care protection.
Betty is single and elderly. She has 3 adult children. She owned her own home and transferred it to an irrevocable trust six years ago. Since establishing her trust, case law handed down has shown that that trust may no longer be effective. It was intended to protect Betty’s home, but there are now issues with the wording.
Fortunately however, the trust allows for distribution out of the trust to Betty’s family members. The trustee deeds the home to Betty’s children. The children then deed the home to a trust they create – the Family Health Trust – that protects the home after all.
Myth busting isn’t just for blowing things up or smashing objects together. We at Borchers Trust Law have taken on the challenge to bust some common misconceptions related to estate planning. The [...]
Northeast Estate Planning Guide © Copyright 2020-2024 Timothy B. Borchers
