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Irrevocable “Medicaid” Trusts her estate would be liable to the
The irrevocable “Medicaid” trust is a nursing home for the cost of the care
special type of trust utilized to protect - at $10,000.00 per month for three
your assets - and in some cases, make years, $360,000.00. Her family would
you eligible for government benefits inherit 10% of her estate, with the
- in the event that you require certain nursing home taking the remainder
forms of care, while safeguarding your of the funds. However, because Rose
assets for the benefit of your heirs. utilized proper planning, the home
passes outside of her estate, and her
In New York State, the average cost creditors cannot collect against the
of a nursing home is approaching house.
$10,000.00 per month at the time of
this writing. In the downstate region, Upon her passing, Rose’s life estate
the cost of such care already exceeds terminates, the house may be sold
that number by approximately 20%. As by her trustee, and the full proceeds
such, the cost of care quickly diminish from the sale - all $400,000.00 - are
your hard earned savings, and prevent distributed to her heirs as per the
your children from inheriting the terms or Rose’s trust. It is important
money that they otherwise would. to understand that there is a statutory
“look back” period which you must
most circumstances, however, your Administratively, the only thing for Let’s utilize the example of “Rose surpass in order for the trust’s
attorneys will recommend one (or your family to do, will be to have your Smith”, a fictional prospective client. benefits to apply to your particular
several) of three variants of trusts - successor trustee(s) begin managing Rose has pension and security income circumstance. At the time of this
the basic revocable living trust, the the trust’s affairs, and disposing of of approximately $3,000.00 per month, writing, the period is five years. Had
irrevocable “Medicaid” trust. Each the trust assets as per your directions. and owns her home outright and free Rose gone into the nursing home
trust serves its own specific purpose of any mortgage. Her home is valued within that window, she would have
- generally, irrevocable trusts are A common circumstance that is at $400,000.00, but she has few other been subject to a penalty.
for asset protection and estate tax encountered in New York is the elderly assets. Rose knows that she wants
purposes, where revocable trusts are decedent who owns both their long to live in her home until her demise, As such, it is essential to plan as
considered “will substitutes”. time New York residence, and a Florida but has a history of Alzheimer’s in far in advance of any major medical
condominium for their retirement her family, and wants to protect her ailment as possible. It is never too
Revocable Living Trusts years. In these circumstances, without major asset (in this case, her home) soon to plan properly. As the above
A revocable living trust (“RLT”) is a an RLT, the family of the decedent so that her children will have a nest example demonstrates, proper
so-called “will substitute” - it is freely will have to probate the decedent’s egg, and her grandchildren will be planning is tremendously beneficial
revocable during your lifetime, and will (or, in the absence of a will, able to go to college without taking to your loved ones, and can be
you (and your spouse, if a joint trust) bring an administration proceeding) out student loans. Rose will nominate the difference between leaving a
may act as trustee(s) of the trust. in both New York and Florida. After an independent trustee (a trusted substantial financial legacy to benefit
RLTs have many advantages - they accounting for filing fees, legal fees, relative, friend or colleague), transfer your family, or paying that money
simplify estate administration, avoid service of process, and the potential title of her home into the Rose Smith over to the government, or other
the necessity of probate, and serve necessity for travel, this can more Irrevocable Trust, and reserve herself unrelated third parties.
special purposes for those who own than double the cost of administering a little estate. Rose continues to live
property in multiple states. An RLT, like the estate. By utilizing a RLT, you can in her home, and remains eligible for
any trust created during the grantor’s avoid these problems, save money the same property tax exemptions to
lifetime, is its own legal person. By and time for your heirs, and leave a which she was previously entitled.
setting up an RLT, you will effectively lasting legacy for your family. Almost
begin administering your own estate without exception, we advise that our Six years later, Rose requires nursing
during your lifetime. This means that clients who own real estate or other home care, and spends three years in
when you pass away, your successor property in multiple States utilize an a nursing home prior to her eventual
trustees will step immediately into RLT for estate planning purposes. passing. Had Rose maintained her
your shoes, without having to go home in her individual name rather
through the length process of probate. an transferring her home to the trust,
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