Irrevocable Trusts

Irrevocable Trusts

CNY Law Firm serving Oneida, Rome, Syracuse, Utica, Chittenango, New Hartford, Whitesboro, Lowville and surrounding areas

If you believe that you should not lose the financial resources and other assets that you have built up over your lifetime because you need or may need nursing home care; please contact Estate Planning attorney Michel DeBottis to schedule a free half hour consultation to discuss how an Irrevocable Trust could protect your assets as well as other Estate Planning tools. 
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Irrevocable Trusts
 
Catastrophic illness and injuries, and the medical, physical and/or mental health problems commonly associated with aging reportedly cause about half of our nation’s older people to live in a skilled nursing facility for some period of their lives. The average monthly cost of staying in a nursing home in Central New York is approaching $10,000 per month. In order to qualify for Medicaid coverage for long term care in a skilled nursing facility, State and Federal Medicaid spend down rules require that you deplete almost all of the financial resources and other assets that you have built up over your lifetime. The money saved and assets developed over a lifetime of hard work can be consumed in a matter of months in a skilled nursing facility.
 
Transfers of your assets as gifts or for less than their value, which are made within the 60 month look back period, that is, within the five years prior to the Medicaid Application, are ineffective. Such transfers trigger a penalty period, based upon the value of the transferred item(s) and other factors. During the applicable penalty period, Medicaid is unavailable to the applicant. This crisis may be avoided through the use of long range estate planning tools called Irrevocable Trusts.
 
Assets that you wish to protect from the Medicaid spend down requirements can be transferred to an Irrevocable Trust, sometimes called Irrevocable Living Trusts. Irrevocable Trusts, are written agreements between you and the person that you choose to manage the assets in the Trust. Irrevocable Trusts must be written in a manner that strictly complies with the increasingly vigorous Federal and State Medicaid requirements.
A properly drafted Irrevocable Trust allows you to accomplish a combination of goals that can not be attained through other means. These goals include, but are not limited to: 
  • asset protection from Medicaid spend down requirements
  • allowing you to enjoy the use and occupancy of real estate held by your trust, while retaining applicable STAR or Enhanced STAR Exemptions.
  • allowing you to retain the income generated by financial assets transferred to your Trust
  • the transfer of assets to your intended beneficiaries is not subject to changes in circumstances after your death
  • if you become incapacitated, your trustee can manage your assets without interruption or complication
  • after your death, the trust assets are transferred without the expense, delay, public exposure and complications of probate
  • favorable income tax treatment for your beneficiaries because they receive the "stepped up basis" (increase in value over what you paid for your home, investments, and other assets), so that upon subsequent sale of the asset, your beneficiaries will have no income taxable gain upon the increase in asset value that occurred during your lifetime
  • the transferred assets will not result in gift tax liabilities
  • unlike jointly owned accounts or gifts made during your lifetime, assets which are transferred upon the termination of your trust are not exposed to loss during your lifetime due to your children's or other beneficiaries' unforseen personal problems such as bankruptcy, divorce and judgment creditors
  • in the case of large marital estates, each spouse can obtain the federal estate tax exemption by establishing separate Irrevocable Trusts
 
Under current law, transfers into an Irrevocable Trust must be made at least 60 months prior to applying for Medicaid. No one knows if and exactly when they will need to apply for Medicaid; so it is wise to plan well in advance for this possibility.
 
Those who put off Asset Protection Planning until a short time before, or even after, admission to a skilled nursing facility, and those who are in a skilled nursing facility due to a sudden catastrophic illness or injury, may also face a crisis regarding their assets. Under these circumstances, proper Medicaid Crisis Planning is essential for asset preservation before submitting the Medicaid Application.

Estate Planning attorney Michel DeBottis offers a free consultation to discuss how an Irrevocable Trust could protect your assets, and to discuss the other Estate Planning tools, such as a Power of Attorney, Health Care Proxy and/or Living Will, and HIPAA Authorization, that should be considered in your personal circumstances.
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