• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Nirenstein, Horowitz & Associates P.C.

Estate Planning | Making a Difference One Family at a Time

An Estate Planning Law Firm
Making a Difference One Family at a Time

Call Now: (860) 548-1000

Attend a Complimentary Seminar
  • Facebook
  • Instagram
  • LinkedIn
  • Pinterest
  • RSS
  • Twitter
  • YouTube
  • Home
  • Our Firm
    • About Our Firm
    • Careers
    • Client Testimonials
    • Meet Our Team
  • Services
    • Asset Protection & Business Planning
    • Estate And Gift Tax Figures
    • Estate Planning
    • LGBTQ Estate Planning
    • Loss of a Loved One
    • Pet Planning
    • Powers of Attorney
    • SECURE Act
    • Special Needs Planning
    • Trust Administration and Probate
  • Elder Law
    • Alzheimer’s Disease
    • Caregiver Information
    • Emergency Medicaid & Nursing Home Planning
    • Guardianship & Conservatorship
    • Hospice Care
    • Medicaid Planning
  • Resources
    • Complimentary Estate Planning Worksheet
    • Complimentary Medicaid/Long-Term Care Calculator
    • DocuBank
    • Elder Law Resources
      • Glastonbury Elder Law Resources
    • Estate Planning Articles
    • Estate Planning Checkup
    • Estate Planning Definitions
    • Estate Planning Presentations
    • Estate Planning Seminars
    • Estate Planning Techniques
    • Frequently Asked Questions
      • Asset Protection and Business Planning
      • Elder Law & Medicaid
      • Estate Administration
      • Estate and Gift Tax
      • Estate Planning
      • Frequently Asked Questions for Families Without an Estate Plan
      • Incapacity Planning
      • In-Home Elder Care
      • Irrevocable Trusts
      • LGBTQ Estate Planning
      • Living Trust
      • Medicaid Planning
      • Nursing Home Asset Protection FAQs
      • Probate
      • Probate Avoidance
      • SECURE Act 2.0
      • Trust Administration
      • Wills
    • Newsletters
    • Probate Resources
      • Probate Resources
    • Published Books
    • Reports
      • Advanced Estate Planning
      • Basic Estate Planning
      • Estate Planning for Niches
      • Trust Administration
  • Seminars
  • Communities We Serve
    • Fairfield County
      • Darien
      • Fairfield
      • Stamford
    • Hartford County
      • Avon
      • Hartford
      • Simsbury
      • West Hartford
    • Litchfield County
      • Watertown
    • Middlesex County
      • Middletown
      • Old Saybrook
    • New Haven County
      • Middlebury
      • New Haven
    • New London County
      • Groton
      • Old Lyme
      • Stonington
    • Tolland County
      • Mansfield
    • Windham County
      • Woodstock
  • REVIEW US
  • Blog
  • Contact Us
Home » Estate Planning » An Irrevocable Trust Can Satisfy These Three Objectives

An Irrevocable Trust Can Satisfy These Three Objectives

October 13, 2020 by Barry D. Horowitz, Estate Planning Attorney

irrevocable trustWhen you learn that there are revocable trusts and trusts that you cannot revoke, you may wonder why you would sacrifice the flexibility. This makes sense on the surface, but there are some good reasons why this can be beneficial.

In legal parlance, you surrender incidents of ownership when you establish an irrevocable trust, because you cannot act as the trustee, and you cannot revoke the trust. To put it more simply, you get the assets out of your own name by conveying them into the trust.

Let’s look at three reasons why you may want to establish a trust that you cannot revoke later on.

Medicaid Planning

Most senior citizens will require long-term care at some point in time, and 35 percent of elders will eventually reside in nursing homes. In our area, the median annual charge for a private room in a nursing home was $176,660 in 2019, and the average length of stay is one year.

Medicare does not pay for nursing home care, but Medicaid will cover the custodial care that these facilities provide. Since Medicaid is intended for people with limited resources, you cannot qualify if you have more than $1600 in countable assets.

We will not get into all the details with regard to countable versus non-countable assets here, but clearly, you have to divest yourself of resources if you want to qualify for Medicaid.

To do this, you could fund an irrevocable, income-only Medicaid trust. As the name would indicate, you would be able to continue to receive income from earnings that are generated by assets in the trust.

You would not be able to touch the principal, but it would not count if you apply for Medicaid to pay for long-term care.

Estate Tax Efficiency

There is a federal estate tax that is a factor for very high net worth individuals. It is potentially applicable on the portion of an estate that exceeds $11.58 million in value. This is the figure for this year, but there are annual adjustments to account for inflation.

The top rate of the tax is 40 percent, so it can have a significant impact on your legacy if your estate is in taxable territory.

Here in Connecticut, we have a state-level estate tax to contend with as well. The exclusion is just $5.1 million, so you could face state-level exposure even if you are exempt from the federal tax.

If you have estate tax concerns, you have to implement an estate tax efficiency strategy. Irrevocable trusts of different kinds are used to satisfy this objective.

Remarriage Planning

If you are getting remarried as a parent, you may be concerned about your children’s inheritances. To make sure that you protect your children while you take care of your spouse appropriately, you could establish in an irrevocable qualified terminable interest property (QTIP) trust.

To execute this strategy, you fund the trust and you name a trustee to act as the administrator. You could potentially name someone that you know, but many people will engage a professional fiduciary. Trust companies and the trust departments of banks provide trustee services for a fee.

Your spouse would be the first beneficiary, and your children would be the successor beneficiaries. The trustee would distribute the earnings that are generated by income producing assets in the trust to your spouse for the rest of their life if you pass away first.

They could also use property that is technically owned by the trust. Your surviving spouse would be provided for appropriately, but they would not be able to change the terms of the trust. After their death, your children would become the beneficiaries of the trust.

Take Action Today!

We are here to help if you are ready to put a custom crafted estate plan in place, and we are offering remote consultation options. You can schedule an appointment right now if you give us a call at 860-548-1000, and you can fill out our contact form if you would prefer to send us a message.

  • Author
  • Recent Posts
Barry D. Horowitz, Estate Planning Attorney
Barry D. Horowitz, Estate Planning Attorney
Founding Partner and President at Nirenstein, Horowitz & Associates PC
Barry D. Horowitz is a founding partner and president of the law firm of Nirenstein, Horowitz & Associates, P.C. He received his diploma from the Loomis Chaffee School and his Bachelor of Arts from Bennington College, where he dual majored in philosophy and music.

Mr. Horowitz was awarded his Juris Doctor degree with honors from the University of Connecticut School of Law. While attending law school, Mr. Horowitz received the American Jurisprudence Award in Legal Ethics and the Nathan Burkan Award.

After graduation from law school, Mr. Horowitz continued his legal education at New York University School of Law where he received a Post Doctorate Law Degree in Taxation. He has also recently received a national achievement award.

Mr. Horowitz is admitted to practice before all the state courts in the State of Connecticut and the United States District Court.

Mr. Horowitz was selected for Super Lawyers in 2021.
Barry D. Horowitz, Estate Planning Attorney
Latest posts by Barry D. Horowitz, Estate Planning Attorney (see all)
  • Take Precautions to Protect Your Legacy - September 12, 2023
  • Regular Reviews and Updates of Your Estate Plan Are Essential - August 24, 2023
  • Estate Planning Tips to Help You Protect Your Family - August 8, 2023
Share our Content:

Filed Under: Estate Planning Tagged With: estate tax efficiency, irrevocable trusts, Medicaid Planning

Other Articles You May Find Useful

estate planning for single seniors
Tackling Unique Estate Planning Challenges for Single Seniors
letter of last instructions
The Last Note: Crafting a Comprehensive Letter of Final Instructions
charitable trusts
Exploring the Tax Benefits of Charitable Trusts
incentive trust
A Trust Can Provide Incentives
estate planning tips
Estate Planning Tips to Help You Protect Your Family
estate planning myths
Debunking 5 Common Estate Planning Myths: Protecting Your Future with Facts

Primary Sidebar

Nirenstein, Horowitz & Associates

Upcoming Seminars

Estate Planning Seminar

Date: October 17

Venue: Canton Community Center, 40 Dyer Avenue, Collinsville, CT, 06019, United States

Estate Planning Seminar

Date: October 18

Venue: Cheshire Public Library, 104 Main Street, Cheshire, CT, 06410, United States

See all Seminars

Follow Us

  • Facebook
  • Instagram
  • LinkedIn
  • RSS
  • Twitter
  • YouTube

TESTIMONIALS

Blog Subscription

Our blog gives you the most up-to-date estate planning news. Sign up today to receive our regular updates!

  • This field is for validation purposes and should be left unchanged.

WESTPORT OFFICE

8 Wright Street, Suite 107
Westport, CT 06880
Phone: (860) 548-1000
Fax: (860) 761-1070
preserveyourestate_sidbr_map

Somerset Square

200 Glastonbury Boulevard, Suite 202
Glastonbury, CT 06033-4418
Phone: (860) 548-1000
Fax: (860) 761-1070
preserveyourestate_sidbr1_map

Office Hours

Monday8:30 AM - 5:00 PM
Tuesday8:30 AM - 5:00 PM
Wednesday8:30 AM - 5:00 PM
Thursday8:30 AM - 5:00 PM
Friday8:30 AM - 5:00 PM

Footer

footer-logo
  • Facebook
  • Instagram
  • LinkedIn
  • RSS
  • Twitter
  • YouTube

The information on this website is for general information purposes only. Nothing on this or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. The information on this website is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.

Privacy Policy | Contact Us | Disclaimer | Site Map | Powered by American Academy of Estate Planning Attorneys

© 2023 American Academy of Estate Planning Attorneys, Inc.