Articles Posted in Irrevocable Trust

Last year federal legislation was passed affecting elder care issues. In particular, the new law eliminated a floundering attempt to create a national long-term care insurance program. At the same time, the law also called for the creation of a commission to study issues of senior care financing, delivery, and workforce needs. Known as the “Long-Term Care Commission,” the general idea was that the diverse Commission would investigate the issues, create policy proposals, and submit the ideas to Congress to spur possible legislation.

The Status Update

Unfortunately, as a recent Forbes story shares, the Commission is still in dock and there are serious doubts as to whether it will be able to achieve its mission at all. The first issue is that the slate of 15 people to sit on the panel have yet to be decided upon. Apparently the White House has yet to make its three choices, and nothing can be done until the roster is actually complete.

This week our New York elder law attorney, Bonnie Kraham, Esq., published yet another article in the Times Herald-Record in order to help spread information about elder law and estate planning issues. Many area residents understand the need to conduct this future planning, but they are not exactly sure what is included in one of these plans. That is why in this latest piece Ms. Kraham shares information about the actual documents that are commonly part of the planning process.

For example, most plans include a revocable living trust (RLT) and an irrevocable Medicaid asset protection trust (MAPT). These tools protect assets from probate and ensure that those valuables are protected from nursing home costs. However, the MAPT need be created at least five years before the long-term care is needed. For families with a higher net worth, separate trusts may need to be created–one for each spouse–with the benefit of doubling the estate tax exemption.

In addition, inheritance trusts are often added to plans to help keep assets in the family bloodline and protected from divorces, lawsuits, and creditors. This ensures that grandchildren actually receive an inheritance instead of in-laws or strangers.

Documents like a power of attorney and health-care proxy are also created so that legal affairs and medical decision can be accounted for in case of disability. Burial instructions are helpful as well to ensure that wishes are carried out exactly as desired. In addition, final instructions are an important–and oft forgotten–part of these plans. This information these instructions contained is directed to your friends and family and shares vital information (PIN numbers, access codes, etc.) and contact information to help them in case of disability.

Personal property is usually not included in a trust, so a memorandum of personal effects is created where a benefactor explains what items (jewelry, collectibles, etc.) are left to which beneficiary. By having these items listed separately an individual is free to change their mind without having to change a legal document.
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by Michael Ettinger, Esq.plan-a-v-plan-b.gif

Long-term care insurance (LTCI) and the Medicaid Asset Protection Trust (MAPT) are often thought of an alternatives to each other. They are not. While LTCI is both a shield and a sword, the MAPT is a shield only.

LTCI protects your assets and income from the costs of care. But it has a positive effect (the sword) in that it actually pays for someone to come into your home and care for you there. The MAPT protects assets, like your home and your life savings, but it does not protect your income (pensions, social security, interest, dividends, etc.). The MAPT has no positive effect in terms of providing care. It is solely a defensive tactic. That being said, in the event LTCI is unavailable to the client for medical or financial reasons, the MAPT is a wonderful tool. And there is truth in the saying that a good defense is the best offense. With the MAPT in place five years ahead of time, the client’s assets are protected and Medicaid will pay for the cost of care, over and above what your income provides. If you have a spouse at home, they may keep about $3,000 per month of the couple’s combined income and sometimes more.

by Michael Ettinger, Attorney at Law funding.gifThe Medicaid Asset Protection Trust (MAPT) is a technique commonly used by elder law attorneys. It consists of an irrevocable trust, usually set up by a parent of parents sixty-five and older. One or more of the adult children are named as “trustees” to manage the trust for the benefit of the “beneficiaries” who remain the parents during their lifetimes. For example, the parents retain the right to the exclusive use and enjoyment of the home and the income from all of the trust assets. The establishment and “funding” of the trust, i.e. retitling the home and the investments in the name of the trust, starts the five year look-back period running. After five years, those assets become exempt and are protected from the costs of long-term care.

Once the MAPT is established, there are certain things the parties can and cannot do. Below are a list of the “Do’s and Don’ts” concerning the MAPT.

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