A Revocable Living Trust Won't Protect Your Nursing Home Assets. This is because the assets of a revocable trust remain under the control of the owner. To protect your assets from reduced spending before you qualify for Medicaid, you'll need to create an irrevocable trust. A revocable trust is an important part of any estate plan that is designed to protect your family's assets from nursing home costs, but on its own it won't protect your assets.
Trusts are the preferred way to protect assets, but the types of trusts used for this purpose are irrevocable trusts that hold assets you have given away. Because irrevocable trusts remove assets from their direct control, it is generally not recommended that you transfer your assets to them until you are reasonably likely to need this type of planning. Unless you anticipate the need for care in a nursing home within the next eight to ten years, the preferred way to plan is to establish a revocable trust along with powers of attorney. This states that if you are unable to implement your own nursing home planning in the future, someone will be appointed to do it for you.
A revocable living trust can help you transfer assets to your beneficiaries and avoid probate a will, making it a useful part of an estate plan. However, the creation of this type of trust will not protect your property from a nursing home, since it still retains ownership over it. You can freely move assets into and out of a revocable trust. Does a family trust protect the assets of a nursing home? The answer is yes, but it has to be a specific type of trust.
Unlike a living trust, an irrevocable trust is exempt from costs. You cannot receive the capital of the irrevocable trust, but the periodic interest and dividends you receive from the trust are safe from seizures. Medicaid, known as MO HealthNet in Missouri, has a 5-year lookback period for donations. This means that if you give away all the assets today, in five years you would qualify for Medicaid to help pay for a nursing home without being penalized for the previous donation of assets.
Proper planning gives the person the ability to protect their assets for their family rather than paying for themselves all long-term care costs. However, there are other valid planning techniques, and some people don't always want irrevocable trusts. When you give assets to an irrevocable Medicaid compliant trust, it works in a similar way to simply giving away assets to another person. Would lose control of assets.
The trustee or trustees of your trust would have sole control. Placing assets in an irrevocable trust has benefits on a direct donation to a person due to creditor protection clauses contained in the irrevocable trust, which would most likely protect the assets of the beneficiary's creditors and bill collectors (until such time as assets are transferred out). of the trust directly in your individual name). In addition, trusts allow multiple trustees to have shared control, which can create more protection for assets.
Families have been using a trust to protect the assets of a nursing home. The Property Protection Fund, an irrevocable trust, also called a house trust, can protect your home and your savings from being consumed by the cost of in-home care. It's different from a living revocable trust. Although a portion of the funds from the original trust “is poured into the estate of the deceased spouse, the testamentary trust included in their will protects that money from being seized to pay for nursing home expenses.
This type of trust helps you avoid the probate process and gives you the flexibility to change the terms of the trust. So, the short answer is that a revocable trust or a revocable living trust isn't going to be enough if you want to protect the assets of a nursing home. A stand-alone, revocable IRA trust designed for asset protection and to enhance wealth accumulation for beneficiaries of various ages. Many of the families I speak to say that the main reason they created their revocable living trust was that they were told at a seminar dinner that it would protect their life savings from the costs of long-term care, such as assisted living and nursing homes.
An irrevocable trust is a legal entity that holds your assets and designates beneficiaries, but does not allow you to make changes or cancel the trust, except in certain circumstances. So, for example, if you put your family's farm in the trust in revocable living and it went that way after death, they wouldn't come for real estate, for payment after you were gone and died. An irrevocable trust can provide asset protection because, with this type of trust, the grantor, the creator of the trust, does not own the assets of the trust from a legal standpoint. Making your living trust will be easier if you think about it carefully and gather the necessary information before you sit down to do so.
A revocable living trust allows you to maintain control over the assets you have placed in the trust, but there are certain circumstances in which an irrevocable living trust is the best option. . .