irrevocable trusts
Irrevocable Medicaid asset protection trusts are not an essential part of any estate plan. Instead, they are something that is done in addition to a comprehensive estate plan.
Specifically, they are a form of lifetime gift—a more sophisticated version of parents giving their house to their children and continuing to live there.
A Cautious Approach to Irrevocable Trusts
Our approach to irrevocable trusts is different from that of many other practitioners. We are not purveyors of these trusts. Rather, we give our clients a full on their risks and benefits and allow them to decide.
The benefit of these trusts is that in many cases, they protect assets from being used for the former owner’s long term care needs. Specifically, five years after they are placed in an irrevocable trust, assets placed in the trust are not considered for purposes of determining the former owner’s eligibility for public benefits related to long term care.
However, irrevocable trusts have a number of drawbacks that we discuss in detail during our meetings. They include:
Loss of control of the assets in the trust.
Negative tax consequences if the asset is sold during the client’s lifetime.
Trustee powers that can be abused by the wrong trustee.
Public benefits eligibility problems if public benefits are needed during the five years after the asset is transferred to the trust.
Quality of care issues for people eligible for public assistance.
Our full article on how we think about irrevocable trusts is available here.
Getting Started
As with all of our planning, plans that include irrevocable Medicaid asset protection trusts start with a no obligation consultation with an attorney. To get started, call our office to schedule your consultation. We look forward to working with you!