Many older adults and those thinking about nursing home living believe that any living trusts protect their assets from nursing home expenses. However, that isn’t strictly true — and even the trusts that do are subject to particular criteria and limitations.
Los Angeles estate attorneys understand the nuances between all kinds of living trusts, allowing people to better prepare their assets and financial climate for nursing home care.
Understanding the Distinctions Between Revocable and Irrevocable Living Trusts
Nobody likes the thought of exhausting their assets to pay for nursing home costs, and with the right type of trust, delivered by an expert attorney, they don’t have to.
As mentioned, such legal professionals understand the variations between living trusts, helping older adults pick the one that’s perfect for them.
Revocable Living Trusts
Typically, people are referring to revocable living trusts when they consider these accounts.
They allow the grantor to amend the trust’s terms or revoke them entirely at any point while they’re alive. Once the grantor dies, the trust is irrevocable.
These accounts are flexible, allowing for changes in people’s circumstances and intentions. Any trustees don’t take control of the account until after the incapacitation or death of the grantor.
Assets held in revocable trusts are considered to be the grantor’s property because they never entirely relinquish ownership.
Irrevocable Living Trusts
On the other hand, irrevocable trusts cannot be changed once they’ve been executed.
Despite what it may seem, this feature can be pretty handy. Once the grantor creates it, the trust assets are effectual, ensuring they’re out of reach of probate courts and creditors. Plus, they aren’t subject to estate taxes.
Naturally, grantors are relinquishing control of their assets. However, they gain favorable tax repercussions.
Depending on the grantor’s situation, a trust attorney would recommend an irrevocable account to help clients qualify for Medicaid programs. Once they transfer the property, they deplete their estate of disposable assets yet gain income from the assets held within the irrevocable trust.
Medicaid Explained
Medicaid is a program for older adults funded by both the state and federal governments.
Becoming eligible for nursing home services through the program can be done in multiple different ways, as advised by professional trust and retirement attorneys. After all, funding nursing home expenses alone is something many families cannot afford to do.
Spending Down Assets
Aside from figuring out which trust type is best for clients thinking about nursing home care, trust attorneys also assist with spending down assets to qualify for their state’s Medicaid program.
Spending down utilizes countable assets to repay particular expenses or debts. While it may seem a somewhat simple task, it’s best to seek advice from trust attorneys to avoid penalty periods being imposed on their benefits.
Trust Attorneys Ensure Nursing Home Care Planning Runs Smoothly
Overall, trust attorneys know the industry inside and out, ensuring their clients always follow the best practices when planning for nursing home care.