Page 11 - Bruegemanns FH
P. 11
for their retirement years. In these independent trustee (a trusted relative,
circumstances, without an RLT, the family friend or colleague), transfer title of her
of the decedent will have to probate the home into the Rose Smith Irrevocable
decedent’s will (or, in the absence of a will, Trust, and reserve herself a little estate.
bring an administration proceeding) in both Rose continues to live in her home, and
New York and Florida. After accounting for remains eligible for the same property tax
filing fees, legal fees, service of process, and exemptions to which she was previously
the potential necessity for travel, this can entitled.
more than double the cost of administering
the estate. By utilizing a RLT, you can avoid Six years later, Rose requires nursing home
these problems, save money and time for care, and spends three years in a nursing
your heirs, and leave a lasting legacy for home prior to her eventual passing. Had
your family. Almost without exception, we Rose maintained her home in her individual
advise that our clients who own real estate name rather an transferring her home to
or other property in multiple states utilize the trust, her estate would be liable to
an RLT for estate planning purposes. the nursing home for the cost of the care
- at $10,000.00 per month for three years,
Irrevocable “Medicaid” Trusts $360,000.00. Her family would inherit 10%
The irrevocable “Medicaid” trust is a special of her estate, with the nursing home taking
type of trust utilized to protect your assets the remainder of the funds. However,
- and in some cases, make you eligible for because Rose utilized proper planning, the
government benefits - in the event that home passes outside of her estate, and her
you require certain forms of care, while creditors cannot collect against the house.
safeguarding your assets for the benefit of
your heirs. Upon her passing, Rose’s life estate
terminates, the house may be sold by her
In New York State, the average cost of a trustee, and the full proceeds from the
nursing home is approaching $10,000.00 sale - all $400,000.00 - are distributed to
per month at the time of writing. In her heirs as per the terms of Rose’s trust.
the downstate region, the cost of such It is important to understand that there is
care already exceeds that number by a statutory “look back” period which you
approximately 20%. As such, the cost of care must surpass in order for the trust’s benefits
quickly diminish your hard earned savings, to apply to your particular circumstance. At
and prevent your children from inheriting the time of writing, the period is five years.
the money that they otherwise would. Had Rose gone into the nursing home
within that window, she would have been
Let’s utilize the example of “Rose Smith”, a subject to a penalty.
fictional prospective client. Rose has pension
and security income of approximately As such, it is essential to plan as far in advance
$3,000.00 per month, and owns her home of any major medical ailment as possible.
outright and free of any mortgage. Her It is never too soon to plan properly. As
home is valued at $400,000.00, but she has the above example demonstrates, proper
few other assets. Rose knows that she wants planning is tremendously beneficial to
to live in her home until her passing, but your loved ones, and can be the difference
has a history of Alzheimer’s in her family, between leaving a substantial financial
and wants to protect her major asset (in legacy to benefit your family, or paying that
this case, her home) so that her children money over to the government, or other
will have a nest egg, and her grandchildren unrelated third parties.
will be able to go to college without taking
out student loans. Rose will nominate an
Brueggemann Funeral Home of East Northport, Inc. - Page 11
