If you're over 65 and you visit an estate planning attorney and they complete a traditional estate plan for you, you may be getting a disservice.
traditional estate plans don't provide asset protection against long term care, nursing homes and Medicaid.
what is a "traditional estate plan" -
Generally, a traditional estate plan for most people will include a financial Power of Attorney document, medical Power of Attorney document and a living Trust.
Both the financial and medical power of attorney documents are a must, no doubt, don't go without them.
However, the living Trust is what were having issue with.
Many of you have probably heard of a living Trust . A living trust is a document that creates an entity that can own property, investments, cash, cars, etc. Almost anything, other than a tax deferred financial account can be owned by a Trust. it's meant to avoid Probate.
A trust has a Trustee who manages the items and beneficiaries who receive these items at your passing.
How does it work?
Ownership of an item is transferred to the trust. Let's say a house. The deed is transferred to the Trust, the Trust now owns the home. You are named as Trustee. You can live in the home, make repairs, etc. do anything that you could before.
The difference shows when you die. Because you're not the owner of the home, when you die, it passes directly to the named beneficiaries. It's not part of your estate.
This process avoids probate. Probate is the legal process of distributing your estate, settling debt, etc. when you pass. Most people wish to avoid this process because it is very lengthy, costly and potentially messy.
So, a living Trust is meant to avoid Probate. That's great, you're all taken care of when you die.
But what happens while you're alive?
if you need long term care you may have to spend all of your savings and sell your home to pay for the cost.
Nursing homes average $10,000 - $14,000 per month [depending on care needs and location].
A living Trust does not protect the items placed in the Trust because it's revocable. That means you can take the items out anytime you wish.
because of that, it does not protect your assets while you're alive.
What can I do?
A properly drafted Asset Protection Trust will safeguard your assets against the cost of long term care.
Because assets held by an Asset Protection Trust are shielded you can apply for Medicaid benefits to pay your long term care costs without spending or selling anything owned by the Trust.
Therefore, a "traditional estate plan" is obsolete.
if you're over 65;
You need Asset Protection planning along with long term care Medicaid planning infused into your estate plan.
long term care planning is complex, most estate planning attorneys are unfamiliar with it.
you need to work with someone who is a Medicaid and long term care expert.
contact us to today to learn more. firstname.lastname@example.org