Here are 7 reasons to consider using a trust to hold assets: 1 - protection from creditors, 2 - protection from elder financial abuse predators, 3 - protection from spouse of a beneficiary who needs to divorce, 4 - asset management, 5 - keep control over the distributions (making it impossible for beneficiary to cash out accounts), 6 - Medicaid planning, and 7 - keeping assets out of the estate of a survivor who might otherwise have to pay estate taxes
Timing determines whether you can accomplish any of these goals with a trust. The trust document must be drafted with an understanding of your facts and the real estate, probate, tax and trust laws in your state.
If you are thinking of planning for Medicaid, will your mother have enough money to pay for long term care if she needs it during the 5 year period after transferring money into a trust?
Does you mother have the competence needed to establish a trust? Do you have the authority to establish a trust for her?
Your question can only be answered by an estate planning attorney in your state who is aware of all the circumstances.
The facts are that many states have found ways to go after a trust if the person applies for Medicaid. On the other hand, a Trust is a good way to protect the person from making the huge mistake of gifting the assets away. When mom and dad need Medicaid to pay for a nursing home, a properly structured Trust will help keep them eligible for aid.
To me whether or not a trust is ideal is for you to determine just what is the plan for your assets both now and then after you die. There are all kinds of trusts and they need to be done correctly by an atty and they have costs and need a source of income to pay on those costs till the trust is dissolved.
There are specific types of property trusts, like QTIPS.
If this "trust talk" is about somehow keeping your assets and then applying for Medicaid, you imo need to have around 7 years before ever needing to go into a Medicaid accepting facility. There is a 5 years lookback but it takes time to get things moved about, legal done, transfers recorded. There needs to be $ to pay for all this and from day 1 of this planning to beyond the grave. Trusts are their own entity and live till there is a planned or unplanned defunding. So is there $ to do this?? like investments or other assets with perhaps rental income from the property that "feed" the trust.
If your thinking your SS or retirement $ can do this that will not work if Medicaid is needed as Medicaid requires a co-pay or SOC (share of cost) of all your monthly income to the NH or AL. If the property trust doesn't have it's own kitty of $, taxes, insurance, etc don't get paid….. Hello tax sale! you see these defunded trusts listed in tax sale all the time.
When I sold my mom's house the proceeds were put into a trust by an elder care atty. I then applied for veteran's benefits to help with the costs for assisted living. Veteran's benefits have a look back period same as Medicaid but couldn't be touched with how it was set-up. Seek an elder care atty. It costs nothing to ask so you know how to proceed.
Medicaid treats assets in a Revocable Living Trust as assets of the applicant. Assets in an Irrevocable Trust are also treated as assets of the applicant if the trustee must distribute them for the applicant's health, education, maintenance and support. Even if the trustee has full discretion over whether to distribute the assets, Medicaid may look askance at an Irrevocable Trust with a close relative as a trustee or without beneficiaries other than the applicant and the applicant's spouse. Medicaid recognizes a Special Needs Trust and an Irrevocable Life Insurance Trust. If someone is talking to you about something else, be sure to consult an elder law attorney (www.naela,.org). There are a lot of advisors out there who only think they know what they are doing -- or don't care. Some of these are or claim to employ lawyers.
This is a very sticky, difficult situation and many laws and other conditions apply. You really have no choice but to consult with an experienced eldercare attorney. Good luck. Remember, there is a five year look back and believe me, every little item is going to be questioned. You need someone who knows what they are doing to handle this question.
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1 - protection from creditors,
2 - protection from elder financial abuse predators,
3 - protection from spouse of a beneficiary who needs to divorce,
4 - asset management,
5 - keep control over the distributions (making it impossible for beneficiary to cash out accounts),
6 - Medicaid planning, and
7 - keeping assets out of the estate of a survivor who might otherwise have to pay estate taxes
Timing determines whether you can accomplish any of these goals with a trust. The trust document must be drafted with an understanding of your facts and the real estate, probate, tax and trust laws in your state.
If you are thinking of planning for Medicaid, will your mother have enough money to pay for long term care if she needs it during the 5 year period after transferring money into a trust?
Does you mother have the competence needed to establish a trust? Do you have the authority to establish a trust for her?
Your question can only be answered by an estate planning attorney in your state who is aware of all the circumstances.
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There are specific types of property trusts, like QTIPS.
If this "trust talk" is about somehow keeping your assets and then applying for Medicaid, you imo need to have around 7 years before ever needing to go into a Medicaid accepting facility. There is a 5 years lookback but it takes time to get things moved about, legal done, transfers recorded. There needs to be $ to pay for all this and from day 1 of this planning to beyond the grave. Trusts are their own entity and live till there is a planned or unplanned defunding. So is there $ to do this?? like investments or other assets with perhaps rental income from the property that "feed" the trust.
If your thinking your SS or retirement $ can do this that will not work if Medicaid is needed as Medicaid requires a co-pay or SOC (share of cost) of all your monthly income to the NH or AL. If the property trust doesn't have it's own kitty of $, taxes, insurance, etc don't get paid….. Hello tax sale! you see these defunded trusts listed in tax sale all the time.