The TRUTH about Living Trusts and Asset Protection
A living trust will NOT protect your assets from the cost of long-term care. In fact, it can hinder your ability to obtain medical assistance benefits to help pay for the care you need. Moreover, you may end up paying more in attorney’s fees to fix the problems created by the living trust.
If you live in Bloomsburg, Catawissa, or Benton, you may have recently received an advertisement in the mail touting the benefits of a living trust. These ads are aimed at seniors, who, according to the AARP, are the least likely to benefit from a living trust.
The claims in these ads are enticing and make it seem as if a living trust is the perfect option – you don’t need an attorney, someone will come out to the house to set it up for you; it will be the only estate planning document you ever need; you can avoid probate and high fees; and your assets will be protected.
Sounds too good to be true . . . well, it is!
What is a living trust?
A living trust is a written document which allows you to direct how the property you place in the trust will be managed during your lifetime and how it will pass after your death. While it can be a good tool in limited circumstances, most times there are better options to accomplish the same or even better results.
Living Trusts and Medical Assistance
A living trust is revocable, which means that you can pull the assets out of the trust and use them. Because of this, a living trust is a fully countable asset under Medicaid law.
Once you transfer assets into the trust, you are no longer the owner of that asset – the trust is the owner. Therefore, if you have transferred your personal home and vehicle into the trust, it is now owned by the trust and will not be considered an exempt asset when applying for Medical Assistance benefits. This will undoubtedly disqualify you or your spouse from receiving those much needed benefits. Titling your home and vehicle in the name of the trust will not protect them from the costs of long-term care.
Beware of Living Trust Scams
There are many scams targeting seniors to create living trusts and reveal personal financial information. The sales tactics are high-pressure and prey on unjustified fears of the senior. Upon review of the information provided, salespersons will often recommend additional investments, which normally result in a high commission to them for the sale of the products and can result in penalties to the senior if they need to tap into those monies for any reason.
What if You Already Have A Living Trust?
Consult a certified elder law attorney and have them review the trust. They can evaluate your situation and goals and assist you:
- to determine whether a living trust is the best option for you
- to develop a complete estate plan that will meet your goals
- to find appropriate ways to finance long term care
Attorney Marianne Kreisher is a Certified Elder Law Attorney and Partner at the Law Offices of Kreisher & Gregorowicz in Bloomsburg. Attorney Kreisher specializes in elder law and provides home, hospital, or nursing facility visits and also has evening hours. She can be reached at (570) 784-5211.