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money and time for your heirs, and leave
a lasting legacy for your family. Almost Six years later, Rose requires nursing home
without exception, we advise that our care, and spends three years in a nursing
clients who own real estate or other home prior to her eventual passing.
property in multiple states utilize an RLT Had Rose maintained her home in her
for estate planning purposes. individual name rather an transferring
her home to the trust, her estate would
be liable to the nursing home for the cost
Irrevocable “Medicaid” Trusts of the care - at $10,000.00 per month
The irrevocable “Medicaid” trust is a for three years, $360,000.00. Her family
special type of trust utilized to protect would inherit 10% of her estate, with the
your assets - and in some cases, make nursing home taking the remainder of the
you eligible for government benefits - in funds. However, because Rose utilized
the event that you require certain forms proper planning, the home passes
of care, while safeguarding your assets outside of her estate, and her creditors
for the benefit of your heirs. cannot collect against the house.
In New York State, the average cost of a Upon her passing, Rose’s life estate
nursing home is approaching $10,000.00 terminates, the house may be sold by her
per month at the time of writing. In trustee, and the full proceeds from the
the downstate region, the cost of such sale - all $400,000.00 - are distributed
care already exceeds that number by to her heirs as per the terms of Rose’s
approximately 20%. As such, the cost of trust. It is important to understand that
care quickly diminish your hard earned there is a statutory “look back” period
savings, and prevent your children from which you must surpass in order for the
inheriting the money that they otherwise trust’s benefits to apply to your particular
would. circumstance. At the time of writing, the
period is five years. Had Rose gone into
Let’s utilize the example of “Rose the nursing home within that window, she
Smith”, a fictional prospective client. would have been subject to a penalty.
Rose has pension and security income
of approximately $3,000.00 per month, As such, it is essential to plan as far in
and owns her home outright and free advance of any major medical ailment
of any mortgage. Her home is valued as possible. It is never too soon to
at $400,000.00, but she has few other plan properly. As the above example
assets. Rose knows that she wants to live demonstrates, proper planning is
in her home until her demise, but has a tremendously beneficial to your loved
history of Alzheimer’s in her family, and ones, and can be the difference between
wants to protect her major asset (in this leaving a substantial financial legacy
case, her home) so that her children will to benefit your family, or paying that
have a nest egg, and her grandchildren money over to the government, or other
will be able to go to college without taking unrelated third parties.
out student loans. Rose will nominate an
independent trustee (a trusted relative, Irrevocable Life Insurance Trusts
friend or colleague), transfer title of her The Irrevocable Life Insurance Trust
home into the Rose Smith Irrevocable (“ILIT”) is a unique instrument that serves
Trust, and reserve herself a little estate. several important purposes, two of which
Rose continues to live in her home, and we will touch on here. Many people
remains eligible for the same property tax are unaware that the proceeds of life
exemptions to which she was previously insurance policies are considered part of
entitled.
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