How Irrevocable Trust Agreements Can Benefit Your Long-Term Care Planning
Many people mistakenly believe that irrevocable trust agreements have no place in their legal planning. Unfortunately, this is usually the case because they have received misinformation that this planning tool is unyielding and will negatively impact their lifestyle. This inaccurate portrayal leads them to believe that this type of trust planning will not allow them to achieve their planning goals and leave them with little to no accessible funds.
These beliefs could not be farther from the truth. When completed correctly, irrevocable trust agreements are planning tools that can help solidify the future that you want and deserve. In developing your long-term care plan, these trusts can ensure the protection of you, your family, your home, and your assets. Although none of us want to consider a future involving a skilled nursing home, the majority of Americans over 55 years of age will need some form of long-term care in the future.
Without this type of planning, your assets can be at risk of being spent completely on the cost of a skilled nursing home, should you need care. Let us share with you three of the key considerations we tell our clients when we work on this type of legal planning.
1. Irrevocable trust agreements can achieve, and often protect more, than revocable trust planning alone.
The word “irrevocable” means “unchangeable”. When a trust agreement is irrevocable this means that it cannot easily be altered by the creator or another person. By design, irrevocable trusts are developed to restrict access to the creator’s assets and, in certain situations, income. By placing specific assets in your irrevocable trust, you can shield them from the reach of creditors and the probate process and create a long-lasting legacy for your heirs. Specifically, when it comes to long-term care planning, an irrevocable trust can protect your assets from being counted as available funds to pay for the cost of your care in a skilled nursing facility thereby rendering you eligible for programs such as Medicaid.
2. The right trustee for your irrevocable trust agreement is crucial.
It is critical to choose the right trustee for your irrevocable trust agreement. Not only should this person be available and fiscally responsible, he or she needs to understand your goals for establishing this type of trust. When trusts like these are created specifically to obtain eligibility for the Medicaid program, you need a trusted person in place to ensure your assets are not wasted and that they are spent only under allowed circumstances. Medicaid planning is complicated and even the slightest inaccurate transaction can cause you to lose your eligibility. Your trustee needs to be able to work alongside you and your elder law attorney in order to ensure you reach the goals the trust was set up to facilitate.
3. Irrevocable trust agreements can allow you to plan early for your long-term care needs.
In the long-term care planning arena, access to a public benefits program such as Medicaid does not happen immediately. Instead, the irrevocable trust agreement needs to be set up and fully funded at least sixty months ahead of the time that you anticipate possibly needing long-term care. Without the completion of this five-year period preceding the need for long-term care, the irrevocable trust will not be able to reach the goal it was designed to reach and your assets will be countable for eligibility purposes.
Creating your irrevocable trust agreement as early as possible is critical when you want to ensure you or a loved one will be able to access the public benefits to one day pay for long-term care. In the long-term care setting, these trusts are invaluable tools. Please do not wait to ask us your questions. We look forward to answering them and working with you to create the right irrevocable trust agreement for you and your family.