Common Misconceptions: Will My Revocable Trust Protect My Life Savings?
This edition of the Koldin Report E-Newsletter continues a series on common misconceptions about Elder Law, Estate Planning and Medicaid.
In this newsletter we discuss misconceptions about Revocable Trusts. All prior newsletters are saved on our website. You can read them by clicking here.
Incorrect: I thought my assets were protected. I have a Revocable Trust.
Correct: We have many clients coming to us with trusts prepared by other attorneys. Many of these clients are under the impression that their assets are protected when they have done a Revocable Trust in the past. A Revocable Trust can be an excellent planning tool for the right client, but it is important for the client to understand that a Revocable Trust does not protect assets in the event Medicaid is needed.
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 catastrophic 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 Trust, where the language of the trust agreement appropriately complies with the federal and state Medicaid requirements.
For more information about Irrevocable Trusts, please see our website by clicking here.
For those who do not want to use an Irrevocable Trust to protect your life savings, but still desire to achieve the other benefits of having a Trust, such as to avoid probate, then a Revocable Trust is ideal.
If you have a Revocable Trust and also want to protect your life savings, then purchasing Long Term Care Insurance should be considered.
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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Remember that the Koldin Law Center offers many services for clients of all ages. Our services range from basic estate planning such as a simple will to complex estate planning including asset preservation planning.
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