Estate planning is a diverse endeavor. What is ideal for one person may not suit the next, and this is something that you should understand when you are planning your estate.
You have many different options, and the ideal course of action will vary on a case-by-case basis.
With the above in mind, there are a number of different types of trusts that can be utilized. The right choice will depend upon your objectives.
The basic distinction between trusts is the matter of revocation rights. Revocable living trusts are very popular, because they facilitate efficient asset transfers, but you do not lose control of the assets while you are living.
You can initially act as the trustee and the beneficiary, so you control the actions of the trust while you are alive and well. When you create the trust, you create a trust agreement. In this agreement you name a successor trustee to administer the trust after you die, and you also name successor beneficiaries.
After your passing, the successor trustee would distribute assets to the successor beneficiaries. The distributions would be made outside of the legal process of probate. This process can be time-consuming and expensive, so many people choose to avoid it.
Many elders rely on Medicaid, because Medicare does not pay for long-term care. Medicaid is a need-based program, so people typically give assets to their loved ones so that they can meet the eligibility requirements.
If you were to create a revocable living trust, assets in the trust would be counted when Medicaid was determining your eligibility. This is because the trust is in fact revocable. You can revoke the trust any time you want to, and the assets would once again become your direct personal property.
Irrevocable Trusts
In addition to revocable trusts, there are also irrevocable trusts. It is possible to create an irrevocable Medicaid trust. Because you cannot revoke the trust, you are surrendering incidents of ownership. As a result, assets that have been conveyed into this type of trust would not be counted when Medicaid evaluators were determining your eligibility.
Many people use income-only Medicaid trusts. With this type of trust you do surrender incidents of ownership with regard to the principal, but you can receive income from the trust.
However, most of your income would go toward long-term care costs if you did eventually qualify for Medicaid to help pay for living assistance.
Medicaid Planning Consultation
Long-term care is extremely expensive around the country, and the costs here in Connecticut exceed the national averages. Most people will require long-term care at some point in time, so this is an issue that affects everyone.
If you would like to discuss Medicaid planning with a licensed attorney, we can help. Our firm offers free consultations, and you can send us a message through this page to request an appointment: Hartford CT Medicaid Planning.
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