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RLT, you can avoid these problems, save entitled.
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
Irrevocable “Medicaid” Trusts be liable to the nursing home for the cost
The irrevocable “Medicaid” trust is a of the care - at $10,000.00 per month
special type of trust utilized to protect for three years, $360,000.00. Her family
your assets - and in some cases, make would inherit 10% of her estate, with the
you eligible for government benefits - in nursing home taking the remainder of the
the event that you require certain forms funds. However, because Rose utilized
of care, while safeguarding your assets proper planning, the home passes
for the benefit of your heirs. outside of her estate, and her creditors
cannot collect against the house.
In New York State, the average cost of a
nursing home is approaching $10,000.00 Upon her passing, Rose’s life estate
per month at the time of writing. In terminates, the house may be sold by her
the downstate region, the cost of such trustee, and the full proceeds from the
care already exceeds that number by sale - all $400,000.00 - are distributed
approximately 20%. As such, the cost of to her heirs as per the terms of Rose’s
care quickly diminish your hard earned trust. It is important to understand that
savings, and prevent your children from there is a statutory “look back” period
inheriting the money that they otherwise which you must surpass in order for the
would. trust’s benefits to apply to your particular
circumstance. At the time of writing, the
Let’s utilize the example of “Rose period is five years. Had Rose gone into
Smith”, a fictional prospective client. the nursing home within that window, she
Rose has pension and security income would have been subject to a penalty.
of approximately $3,000.00 per month,
and owns her home outright and free As such, it is essential to plan as far in
of any mortgage. Her home is valued advance of any major medical ailment
at $400,000.00, but she has few other as possible. It is never too soon to
assets. Rose knows that she wants to live plan properly. As the above example
in her home until her demise, but has a demonstrates, proper planning is
history of Alzheimer’s in her family, and tremendously beneficial to your loved
wants to protect her major asset (in this ones, and can be the difference between
case, her home) so that her children will leaving a substantial financial legacy
have a nest egg, and her grandchildren to benefit your family, or paying that
will be able to go to college without taking money over to the government, or other
out student loans. Rose will nominate an unrelated third parties.
independent trustee (a trusted relative,
friend or colleague), transfer title of her Irrevocable Life Insurance Trusts
home into the Rose Smith Irrevocable The Irrevocable Life Insurance Trust
Trust, and reserve herself a little estate. (“ILIT”) is a unique instrument that serves
Rose continues to live in her home, and several important purposes, two of which
remains eligible for the same property tax we will touch on here. Many people
exemptions to which she was previously are unaware that the proceeds of life
Page 30 - Powell Funeral Home, Inc.
