We recently met with an estate planning client and her eyes got big and wide when we mentioned that she might need a trust to do what she wanted to accomplish. Her concern was that she did not have enough assets to justify setting up a trust. But she did! Trusts aren't just for the rich and famous and they don't necessarily need to be income-producing; they can be used to shelter assets or as a supplement for a will. Today I want to show you two types of trusts we have set up for clients who were financially well-off but were definitely not millionaires.
The Medicaid Asset Protection Trust (Irrevocable Trust)
Estate planning clients often use this type of trust to protect their assets from Medicaid estate recovery in case they have to go into the nursing home. Essentially, these clients move their house, bank accounts, retirement accounts, and other assets into this type of trust to ensure that these assets go to their heirs and is not recovered by Medicaid. This type of trust is for people who have assets, but do not have the wealth to be "private pay" when entering the nursing home, which now costs at least $7,000.00 per month. The catch here is that you don’t own the assets anymore and you cannot simply take them back. I have written a book on Medicaid asset protection that goes into more detail, and you can download it from our site.
The Living Trust (Revocable Trust)
This type of trust is often used to transfer assets outside of probate court and to give you control of your assets “from beyond the grave,” or with “strings attached.” For example, you may want to leave money to your children or grandchildren, but not until they are mature enough to be smart with the money. We can set up a trust so that no one gets money until they reach the age of, say, 25 or 30. Or, if you are a parent of young children, you may want a living trust to hold on to your assets so they can be used for the benefit of your children if you happen to die young. Unlike the Medicaid trust, revocable trusts allow you to take the assets back and give you the flexibility to update your estate plan when life changes occur.
These are just a few examples of what we can help you do. We would love to hear what estate planning ideas you have and to let you know how we can help you carry them out. Feel free to give us a call at 740.346.2899!