Answers to Common Questions about Irrevocable Trust planning–Part 3
This edition of the Koldin Law Center E-Newsletter is part of a series on answers some common questions we receive about Irrevocable Trust planning.
All prior newsletters are saved on our website. You can read them by clicking here.
Question: If I require nursing home care 4 years after I fully funded my Irrevocable Trust, does my Trust planning fail to protect my life savings?
Answer: Your Trust is still valid, but the assets are not yet protected until the assets have been titled in the name of the Trust for 5 years.
For example, if you paid privately at the nursing home for one more year, you would then be past the 5 year lookback period and the Trust assets would be protected.
You should meet with your attorney to discuss your options for how to pay privately with assets that are not in your Trust.
Question: If I sell my house that is owned by the Irrevocable Trust and purchase a replacement house also in the name of the Trust, does this restart the 5 year lookback clock?
Answer: It is actually your Trustee that sells your house and purchases the replacement house. As long as all transactions are done in the name of your Trust, the 5 year lookback period does not restart.
However, if you used money outside the Trust from your own personal accounts to pay for a portion of the cost of a new house, then there would be a new 5 year lookback on that portion.
At no time should any funds from the sale of the house be put back in your name. The funds should be deposited into an account titled in the name of your Trust.
Question: Do we need Successor Trustees?
Answer: If you have more than one Trustee appointed when the Trust is created, then if any Trustee becomes unable to serve, the remaining Trustees could continue to serve. If you only have one Trustee appointed, then it would be advisable for you to designate Successor Trustees in your Trust document.
Question: Can an Irrevocable Trust be revoked?
Answer: You cannot revoke the Irrevocable Trust by yourself. However, under New York law, an Irrevocable Trust can be revoked upon the agreement of all interested parties to the Trust which is typically the Grantor and all beneficiaries.
Question: Would it be beneficial to consider a Revocable trust with long term care insurance instead of an irrevocable trust?
Answer: Both an Irrevocable Trust and a Revocable Trust will avoid probate for any assets transferred to the Trust.
An Irrevocable Trust will protect your life savings after the 5 year lookback period has expired.
A Revocable Trust will not protect your life savings which is why long term care insurance is often considered.
There are advantages and disadvantages for each option which should be discussed with your attorney.
For a more detailed discussion about both Irrevocable and Revocable Trusts, please see our website by clicking here.
At the Koldin Law Center, P.C., located in East Syracuse, New York, we have over 50 years of experience helping individuals plan for immediate crisis and long term care. Our attorneys are available to discuss your estate planning options, including the advantages and disadvantages of Revocable Trusts and Irrevocable Trusts, along with other estate planning considerations including a Will, Power of Attorney, and Health Care Proxy. We do not charge a fee for the initial consultation. We welcome your children, family attorney, accountant, and/or financial planner to be present at the initial consultation.
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