This originally aired on the Catholic Faith Network’s show CFN Live: https://youtu.be/Uy9_EvlFiFo While most people…
Unfortunately, seniors are prime targets for financial abuse and scams. Sadly, the elderly are often taken advantage of by strangers — and sometimes even their own family members. That’s why it’s crucial that planning is in place to help seniors protect themselves and their assets.
As we age, it can become increasingly challenging to manage our assets. Most of us will, at some point, need to help ensure that our financial assets and other valuables aren’t depleted. If you or an aging loved one are looking for ways to safeguard assets, a living trust is often the best way. Living trusts allow seniors to designate the right person to manage their finances and assets.
What is a Living Trust?
Living trusts help protect and manage the assets of those who can’t due to age, illness, or disability. Many seniors assume that a will is the only protection they need. However, revocable living trusts and irrevocable living trusts are designed to safeguard the assets of the living, while wills only outline what happens when they pass away. Furthermore, wills must go before a probate court, and taxes must be paid on inheritances. Living trusts allow beneficiaries to avoid probate and minimize taxes after their loved one’s passing.
To establish a living trust, the owner or grantor places assets within the trust. The grantor then appoints a trustee to manage it and names beneficiaries to receive the assets when the time comes.
There are different types of living trusts with a variety of benefits:
A testamentary trust protects a senior’s assets when a spouse dies. Assets of the deceased are transferred into a trust — enabling the appointed trustee to make all financial decisions regarding those assets. The surviving spouse is protected from fraud or mismanaged assets. Trustees can help the surviving senior generate income from remaining assets via sales or investments and take advantage of tax benefits.
Revocable Living Trusts
A revocable living trust safeguards seniors by making it more difficult for non-trustee family members to mismanage money or assets. The grantor (senior) can amend or revoke the trust at their own discretion without the beneficiary’s consent. This type of trust allows the grantor to stay in control of assets by either serving as a trustee or appointing one. In this case, the grantor, serving as trustee and beneficiary of the trust, appoints a successor if they become incapacitated or die. This designated person is then responsible for the disposal of the trust’s assets.
Irrevocable Living Trusts
An irrevocable living trust can’t be changed or revoked by the trustmaker. This means that the grantor/trustmaker gives up their rights to the assets once they are transferred. Seniors over 65 who are eligible for Medicaid often choose to transfer assets into an irrevocable living trust to avoid having to dispose of assets in order to remain eligible for Medicaid coverage or long-term care benefits. Once assets are in an irrevocable trust, they can’t be counted for Medicaid eligibility purposes, but there could be a penalty for transferring assets incorrectly.
Working with an Elder Law Attorney
An elder law attorney can assist in determining the best way to set up this type of trust and properly transfer assets based on Medicaid stipulations. An irrevocable living trust can provide income for seniors and their spouses. It also protects their property and other assets from being seized to pay for medical costs without impacting Medicaid eligibility. This trust can also remain in place for a surviving spouse after the grantor’s death.
The sooner assets are placed in an irrevocable living trust the better, as penalties are assessed by Medicaid during a standard five-year look-back period in most states. It takes time to prepare, but it is well worth it when the need for long-term care arises. A transition to in-home or nursing home care with the comfort and quality you prefer can be relatively quick and easy.
Ultimately, living trusts give seniors more control over their assets than a will, allowing them to set stipulations and appoint a trusted advisor to help them make critical decisions. If you or your loved one would like more information about setting up a living trust, the lawyers 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. And be sure 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.