Irrevocable Trusts

Upstate New York Irrevocable Trust Lawyer

The only type of Trust that will truly protect resources in the event of a catastrophic illness where Nursing Home Care or Home Care is needed is an Irrevocable Trust, also known as a Medicaid Trust, where the language of the Trust Agreement appropriately complies with the federal and state Medicaid requirements.

What is an Irrevocable Living Trust?

An Irrevocable Living Trust is created by a written agreement between you and the person you choose to manage the assets in the Trust. The terms of the Trust Agreement should be tailored to meet your specific needs and objectives.

On your death, your trust assets will be distributed directly to your named beneficiaries without the costs, problems, publicity, or delays of Probate.

You can also direct that on your death that your assets be left in a special trust for some or all of your designated beneficiaries, such as a trust for minors.

The Language of the Trust Agreement is Critical

All of the assets in the Trust are governed by the Trust Agreement signed by you and your Trustee. The terms of the Trust Agreement are critical in order to protect assets in the event you need Nursing Home Care or Home Care. The state and federal Medicaid laws have stringent requirements pertaining to Trusts. Savings, investments, and property in Trusts failing to meet these regulatory standards will become vulnerable in determining Medicaid eligibility.

Children's Problems Do Not Affect Trust Assets

When assets are transferred directly to children, the children become the owners of those assets. Most of the risks and disadvantages involved in transferring assets directly to children can be avoided with a properly written Trust Agreement. For example, a well written Trust:

  • will not result in income tax consequences for children.
  • will not cause financial aid problems for grandchildren.
  • will not cause trust assets to be lost if a child is sued, involved in a divorce, or has other personal problems.
  • will not result in gift tax liability

Supplemental Needs Trust as Part of Beneficiary Clause

A Supplemental Needs Trust is a trust which provides for a person with disabilities. Under this type of trust, the person with disabilities would receive distributions to supplement any benefits he/she was receiving from governmental programs. The person with disabilities would not be disqualified from receiving such governmental benefits. By making a Supplemental Needs Trust part of the beneficiary clause of an Irrevocable Trust, the person with disabilities will be quickly provided for without the delays and costs of Probate.

Irrevocable Trusts Can Minimize Estate Taxes

By establishing separate Irrevocable Trusts with the appropriate language, each spouse can utilize New York and federal estate tax exemptions.

Irrevocable Trusts Provide for Asset Management in the Event of Incapacity

If you establish your own Irrevocable Trust and later become incapacitated, your designated Trustee continues to manage your assets in the trust with virtually no difficulties. This allows for your estate planning investments to remain intact.

Irrevocable vs. Revocable Trusts

Under the Medicaid laws, any assets that you can withdraw from your trust are not protected. Medicaid will require you to use those assets towards the cost of care in a Nursing Home or for Home Care. A revocable trust does not protect your life savings or your family home in the event of a long term illness. Since you can revoke the trust, Medicaid can force you to revoke the Trust and withdraw all the Trust assets and use those assets towards the cost of care. The only type of Trust that will truly protect your life savings and your family home in the event of a catastrophic illness is an Irrevocable Medicaid Trust where the language of the Trust Agreement appropriately complies with the federal and state Medicaid requirements.

If your objective is not to protect your life savings with the Trust, but rather it is only to avoid probate or minimize estate taxes, then a Revocable Trust might be more suitable. Long Term Care Insurance should also be considered.

The Medicaid Transfer Rules

A transfer to an Irrevocable Trust is subject to the Medicaid transfer rules with a 5 year lookback period.

Immediate Health Care Crisis

If you are already in a Nursing Home or need Home Care, other estate planning options to protect your home and life savings should be reviewed.

Advantages of an Irrevocable Trust

A Trust can serve a multitude of purposes depending on your desired objectives, such as:

  • Asset protection for the Healthy Spouse and Family Members.
  • Avoid Probate
  • Avoid risks of placing assets in children's names.
  • Estate Tax planning.
  • Asset management in the event of incapacity.
  • Peace of mind.

At the Koldin Law Center, P.C. with offices in Syracuse and  New York, we have over 50 years of experience helping elderly individuals plan for immediate crisis and long term care. Our firm represents clients in Onondaga county and throughout all of Upstate New York.

Contact our experienced Upstate New York elder law attorneys to schedule a free initial consultation. We are available for home and hospital visits and our flat fees are very reasonable.