Incorporating irrevocable living trust into your estate plan come to the number of benefits but chief among them are that it helps to avoid the probate process which can be lengthy and costly to an estate. The second is that it helps you in the event of an incapacity so if you find yourself incapacitated after an accident or perhaps after developing dementia, the document would dictate who’s to take over your trust and will give them access to your money in order to pay for your care.
We, at Walser & Herman Law Firm, provide a revocable living trust for our clients. A revocable living trust is one that is very helpful in avoiding probate. Let’s start by defining what probate means. Probate is the process by which the law court sees to the distribution of property that belongs to a deceased person at the time of death after all the debts and taxes of the deceased have been paid in full.
During your lifetime, you are allowed to transfer ownership of your assets to a revocable trust. This is done so that these assets are owned by the revocable trust after your death and is, therefore, subject to probate.
The properties in a revocable trust can be revoked, meaning it can be taken back or the terms of the trust can be changed, as long as you are alive and deemed competent to make such decisions. Your creditors can take those assets during your lifetime if you owe them money because you retain control of the trust. However, the trust makes it more difficult for creditors to access these assets.
A revocable trust can become irrevocable after the death of the grantor. This implies that the assets that have been entrusted into the trust cannot be taken back, and they must be given out to the beneficiaries of the trust as directed by the trust document.
You need to meet and speak with a competent attorney to come up with a well thought out plan for preserving your assets for long-term care planning.
To protect your assets, you need to meet and speak with a competent attorney to come up with a well-thought-out plan for preserving your assets for long-term planning.
With the Deficit Reduction Act of 2005, it is much more difficult to meet the requirements for Medicaid as a citizen age 65 and older in need of long-term health care. The most severe consequence of this act is the directive that transfers made within a “Medicaid look-back period” would render a person ineligible for Medicaid services.
With this five-year look-back period taken into consideration, and given the complexity of the application process, many people have been reluctant to engage in Medicaid planning.
However, Medicaid planning should be employed to counter these adverse requirements and protect one’s assets.
For those who may be wary of expending their savings due to the high cost of long-term care, a transfer of assets, following a well thought out plan is highly recommended. Transfer of assets, if done correctly, can be beneficial.
There are some asset protection strategies that could prove very useful, such as Federally exempted funds, Caregiver agreements, and Pooled income trust.
Improperly moving your assets. If you improperly move your assets it may qualify as a gift or uncompensated transfer, which if done within the last five years prior to application, you could be penalized for.
There are many ways one can make a mistake when dealing with Medicaid asset protection planning. There is a very complex system with some rules that must be followed, and failure to follow them could lead to the offender been penalized.
One of the mistakes that many people tend to make is the $15,000 per year gifting allowance. It is important to note that this is not a Medicaid rule but an IRS rule. In the Medicaid world, failure to comply with this rule will result in penalization for a full five years from obtaining any Medicaid coverage.
Another mistake many people make is their failure to pre-plan. Most people do not consider the possible need for long-term care at a time when they are still young and healthy.
However, pre-planning is the surest way to avoid the possibility of losing a lifetime of savings to the costs of long-term care. This is how it works; If you are young enough and can qualify, a long-term insurance plan should be considered and purchased.
Talking about common mistakes, people make in their dealings with us; the late application is a prevalent one. The timing of a Medicaid application is very crucial. If you intend your savings to be used for your long-term care needs, make a claim right away.