Our Elder Law and Estate Planning attorneys are deeply committed to the well-being of our clients and their families. Estate planning can be confusing and overwhelming, not to mention there are many different types of trusts that exist. There are reasons why you may want to use one trust rather than another trust. Each situation is different, and this is why personalized attention is so very important.
This is exactly what you will get when you choose our firm as your estate planning partner.
We place an emphasis on client communication, so you can rest assured that all of your questions will be answered, and at the end of the process, you will be able to make fully informed decisions.
In this blog post, we will look at two different types of trusts that can be utilized, and we will explain the rest of them in future posts.
Revocable Living Trust
A Revocable Living Trust is an asset transfer vehicle that can be a good alternative to a Last Will and Testament. The person that establishes this type of trust is called the grantor, and the grantor will name beneficiaries that will receive distributions from the trust after the grantor’s passing.
There will also be a trustee named in the trust agreement to manage the trust. It can be an individual, like a family member, or a professional fiduciary, like a trust company, or the trust department of a bank.
In this trust agreement, you can instruct the trustee to distribute assets on a limited basis over an extended period of time to prolong the viability of the trust. You can also empower a disability trustee to manage the assets in the event of your incapacitation, and this is another advantage.
Plus, assets in a Revocable Living Trust can be transferred outside of the lengthy and expensive process of probate.
Asset Protection Trust / Medicaid Trust
Most senior citizens will qualify for Medicare as a source of health care insurance when they reach the eligibility age, which is 65 at the current time. This government program will assist with health care costs, and it will cover rehabilitation in a facility after an injury or surgery.
However, Medicare will not pay for custodial care. This is the type of care that you would receive in a nursing home or assisted living facility.
If you are thinking that it is unlikely that you will ever need help with your activities of daily living, you may want to reconsider your perspective. The United States Department of Health and Human Services maintains a very useful website for people that are looking ahead toward the future called LongTermCare.gov.
According to their site, seven out of ten people that are turning 65 on any given day will eventually require living assistance. So if you expect to live long enough to qualify for Medicare, it is quite likely that you will need living assistance at some point in time. Of course, you can simply pay out-of-pocket if you ever move into a nursing home, but if you do, you better have extremely deep pockets.
Our office is in Schereville, Indiana. In our area, the median annual cost for a private room in a nursing home was just over $111,000 in 2019, and the average length of stay is just shy of two and one-half years. If you are married, your family may be faced with two separate instances of these burdensome costs.
Medicaid is a jointly run federal/state government program that does pay for long-term care. In fact, most of the people in nursing homes are relying on Medicaid to pay for their care, and many of them were never poor.
There is an asset limit of just $2000 that you must stay within to qualify for Medicaid, but some things that you own don’t count. There are also spousal impoverishment laws that protect the “healthy” spouse’s income and non-countable assets.
To aim toward Medicaid eligibility when the time is right, our Elder Law and Estate Planning attorneys can help you establish an Asset Protection Trust (sometimes referred to as a Medicaid Trust). You would not be able to touch the principal, but you would be able to access the earnings from the trust if needed.
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