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The 5 Benefits of an Irrevocable Trust

“I want to transfer my home/money/assets to my children so that Medicaid can’t get it if I need to go into a nursing home.”  As elder law and estate planning attorneys, we hear this every day.  But did you know that even very modest amounts of assets may benefit from being transferred into an irrevocable trust, instead of being gifted outright?

An article on the website recently discussed some of the reasons why the use of an irrevocable trust may be better than gifting. As such, here are the 5 benefits of an irrevocable trust that you should know about:

Benefit: Keeping Control

A properly drafted irrevocable trust can allow you to maintain control of your assets by giving you the power to change the beneficiaries and the trustees of the trust at any time.

Benefit: Lowering Money Lost to Taxes

Assets you gift during your life get a carry-over basis, while assets inherited at your death through an irrevocable trust get a step-up in basis to the date of death value.  This means that an irrevocable trust can help your beneficiaries avoid hefty capital gains taxes when the property is later sold.

Benefit: Protection from Long-Term Care Costs

An irrevocable trust can protect your assets in the event you need long-term care paid for by Medicaid.  If the trust is properly drafted in accordance with certain requirements and if it has been more than five years since the trust was drafted, trust assets are exempt for eligibility purposes.

Benefit: Income Usage

An irrevocable trust can be drafted in such a way that it allows you to continue living off of the income from income-producing assets placed in the trust, as long as you remain out of a nursing home.

Benefit: Protection from Creditors

Children or others who you may transfer money to for safekeeping can have their own creditors, which may not be known at the time the assets are transferred.  Those creditors can then go after the transferred funds.  Funds in the trust are not subject to the claims of beneficiaries’ creditors while they are held in the trust.

If you or a loved one are interested in discussing whether or not an irrevocable trust is for you, please do not hesitate to contact our office and set up a consultation.  As elder law, estate planning, and special needs planning attorneys, we have the experience necessary to help you understand your options and would be happy to assist you in coming up with a plan to meet your specific goals.

Russo Law Group, P.C.
100 Quentin Roosevelt Blvd., Suite 102
Garden City, NY 11530

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