Living Trusts: How They Can Benefit Seniors

Unfortunately, seniors are prime targets for financial abuse and scams. The elderly are often taken advantage of by strangers — and sometimes even their own family members. That’s why it’s crucial to have planning in place to protect seniors and their assets.

As we age, managing assets can become challenging. Most of us will, at some point, need to ensure our financial assets and valuables aren’t depleted. If you or an aging loved one want to safeguard assets, a living trust is often the best solution. Living trusts allow seniors to designate the right person to manage their finances and assets.

Key Takeaways:

• Seniors are vulnerable to financial abuse and need proactive protection for their assets.
• Living trusts offer important benefits over wills, including avoiding probate and minimizing taxes.
• Different types of trusts serve unique purposes—working with an elder law attorney is essential for proper setup.

Contents

• What is a Living Trust?
• Types of Living Trusts
• Testamentary Trust
• Revocable Living Trusts
• Irrevocable Living Trusts
• Working with an Elder Law Attorney
• Final Thoughts

What is a Living Trust?

Living trusts help protect and manage the assets of those who can’t due to:

• Age
• Illness
• Disability

Many seniors mistakenly believe a will is enough protection. However, unlike wills — which only take effect after death and must pass through probate court with applicable inheritance taxes — living trusts are designed to protect the assets of the living.

Benefits of living trusts include:

• Avoiding probate
• Minimizing taxes
• Faster asset distribution to beneficiaries

To establish a living trust, the owner (or grantor):

• Places assets within the trust
• Appoints a trustee to manage those assets
• Names beneficiaries to receive the assets in the future

Types of Living Trusts

Testamentary Trust

A testamentary trust protects a senior’s assets when a spouse dies. The deceased’s assets are transferred into a trust, allowing the appointed trustee to make all financial decisions regarding those assets.

Key benefits for the surviving spouse include:

• Protection from fraud or asset mismanagement
• Income generation through sales or investments
• Tax benefits via strategic asset management

Revocable Living Trusts

A revocable living trust helps seniors safeguard their assets by making it more difficult for non-trustee family members to interfere or mismanage money.

Features include:

• The grantor (senior) can amend or revoke the trust anytime without beneficiary consent
• The grantor can stay in control by serving as trustee or appointing one
• If incapacitated or deceased, a successor trustee manages and disposes of assets according to the trust

Learn more about the pros and cons of revocable living trusts and what to do after setting one up.

Irrevocable Living Trusts

Irrevocable trusts cannot be changed or revoked by the grantor once established, meaning the grantor gives up rights to those assets.

Many seniors over 65 use irrevocable trusts to:

• Avoid disposing of assets and still remain eligible for Medicaid coverage or long-term care benefits

Working with an Elder Law Attorney

An elder law attorney can help determine the best trust setup and ensure asset transfers comply with Medicaid rules.

Benefits of an irrevocable living trust include:

• Providing income for seniors and their spouses
• Protecting property and assets from seizure for medical costs
• Preserving Medicaid eligibility
• Remaining in place for surviving spouses after the grantor’s death

Because Medicaid imposes a five-year look-back period for penalties, the sooner assets are placed into an irrevocable trust, the better. While preparing these trusts takes time, it can make the transition to in-home or nursing care more comfortable and efficient.

Final Thoughts

Ultimately, living trusts give seniors more control over their assets than wills do, allowing them to set stipulations and appoint trusted advisors for critical decisions.

If you or a loved one want to learn more about living trusts, the attorneys at Russo Law Group, P.C can help. Please contact us or call 1(800) 680-1717 to speak with qualified elder law and estate planning attorneys in New York about tailoring a living trust to your unique needs.

Don’t forget to take advantage of our free seminars and webinars to learn more about how we help you plan for the future and achieve peace of mind.