If you or your spouse requires long-term care, consider an Irrevocable Living Trust. It is one of the Medicaid asset protection strategies that can still be used to protect your assets.
When you establish an Irrevocable Living Trust, as grantor you give up your ownership and control of your property and assets through a gift to the trust. The trust itself becomes taxable as a separate entity, and pays the tax owed on accumulated income. Typically, trusts receive income tax deductions.
Pros and Cons
You must decide to go into this arrangement with open eyes. Once established, you cannot get your property back after it is gifted to the trust. Irrevocable means final, not able to be changed. There will be some costs and fees involved.
But Irrevocable Living Trusts can have decided advantages in different situations. They can be used for asset protection, estate tax sheltering, or as a way to protect an ill spouse or disabled loved one who receives government benefits.
Depending on the purpose, Irrevocable Trusts may be drafted differently. For example, one tailored to meet Medicaid’s regulatory parameters will not read the same as a trust designed for sheltering assets as net worth from the Veterans Administration.
The complexities of Medicaid Planning demand understanding. At Unsworth LaPlante, PLLC in Vermont, we can help you.