Revocable vs. Irrevocable Trusts
This edition of the Koldin Law Center E-Newsletter continues a series about Trusts which builds on the “Back to the Basics” series to meet your estate planning objectives.
The previous newsletter reviewed how Living Trusts can avoid Probate.
All prior newsletters are saved on our website. You can read them by clicking here.
In this newsletter we compare Revocable and Irrevocable Living Trusts.
Revocable Trusts and Irrevocable Trusts are Living Trusts
Revocable Trusts and Irrevocable Trusts are Living Trusts. These Trusts are created and typically funded while you are living.
Revocable Trusts and Irrevocable Trusts are created by written agreement between the Grantor and one or more Trustees.
Revocable Trusts and Irrevocable Trusts Avoid Probate
Both Revocable Trusts and Irrevocable Trusts avoid Probate for all assets transferred to the Trusts.
On your death, or whenever the Revocable Trust or Irrevocable Trust document says that the Trust terminates, the Trustee will then distribute the Trust assets to the beneficiaries you have designated in the Trust document.
No Court proceeding is needed to authorize the Trustee to distribute to your beneficiaries.
Will a Trust Protect My Life Savings from Long-Term Care Costs?
Revocable Trust
No. Assets in a Revocable Trust are generally not protected for Medicaid purposes. Because you retain the right to revoke the Trust and take the assets back at any time, Medicaid treats those assets as still belonging to you. If you need Nursing Home Medicaid or Community Medicaid, you may be required to use those assets to help pay for your care.
Irrevocable Trust
Yes, if properly designed and funded. An Irrevocable Trust is the primary estate planning tool used to protect your savings and your home from the cost of long-term care. To provide that protection, the Trust must be carefully drafted to comply with federal and New York Medicaid laws, and transfers to the Trust must satisfy the applicable Medicaid rules, including any required look-back period.
If your primary goal is simply to avoid probate—not asset protection—a Revocable Trust may be the better choice. Long-term care insurance is another planning option that should also be considered.
Can I Revoke My Trust?
Revocable Trust
Yes. You may revoke or amend your Revocable Trust at any time without anyone else’s consent.
Irrevocable Trust
Not by yourself. One of the key reasons an Irrevocable Trust protects assets is that you cannot simply change your mind and take the assets back whenever you wish.
However, New York law allows many Irrevocable Trusts to be revoked or modified if all interested parties consent.
For most of our clients, the interested parties include:
- The parents (the Grantors who created the Trust), and
- The children (the Trust beneficiaries).
As a result, the parents and children acting together may be able to revoke or modify the Trust, depending on its terms and the applicable law.
Because you cannot revoke the Trust on your own, Medicaid generally cannot require you to undo the Trust or reclaim the assets to pay for your care. That inability to act unilaterally is one of the reasons an Irrevocable Medicaid Trust can provide valuable asset protection.
For a discussion of Living Trusts, please visit our website by clicking here.
How We Can Help
The Koldin Law Center, P.C., located in East Syracuse, New York, has over 50 years of experience helping individuals and families navigate elder law, estate planning, and Medicaid planning.
Our practice is limited exclusively to Elder Law, including:
- Medicaid planning and applications
- Asset protection strategies
- Wills, Powers of Attorney, and Health Care Proxies
- Revocable and Irrevocable Trust planning
When we handle a Medicaid case, we do more than submit the application—we review strategies to protect assets both before and after Medicaid eligibility is established.
We offer no-fee initial consultations, and we welcome the participation of adult children, attorneys, accountants, and financial advisors.
There is something you can do.
We are here to help.
Our Attorneys are available to speak to your organization
Our Attorneys speak to groups throughout New York State as a public service. If you would like to arrange for one of our Attorneys to speak to your group, please contact our office.
We appreciate your referrals
We have been told by many clients who are in a crisis that they wish they had known about our firm much sooner. We are proud of the many families we have helped in times of crisis.
We are also proud of the many families we helped avoid financial crisis by doing estate planning in advance.
We all share the responsibility for making our family and friends aware of the planning options available to them.
Your referral to the Koldin Law Center could make a major difference in the lives of your family and friends if they are someday faced with a long term illness.
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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