Estate planning is complicated and can sometimes seem overwhelming. At the Law Office of Andres D. Gil we take great efforts to understand our clients’ needs and provide them with the best legal services to meet their goals. A topic of late is the Medicaid asset protection trust. It is important to recognize the difference between a revocable trust and a Medicaid asset protection trust before you make any decisions.
The revocable trust, also known as the living trust, is a legal tool that allows a client to avoid the costs and time constraints associated with probate court while retaining ownership and possession of their home and other assets. Often people are concerned about Medicaid and the reach-back provisions that allow Medicaid to withdraw assets from the estate. The benefits of a revocable trust should not be confused with those of a Medicaid asset protection trust.
There are specific differences between the two that you must be aware of. First, you retain ownership of your property as the trustee in a revocable trust, whereas, the Medicaid asset protection bars you from naming yourself as the trustee. Why is this significant? If you decide to sell your home because you want to physically move or liquidate your assets for any reason, the revocable trust allows you to do this as the trustee; however, you do not have the same flexibility with the Medicaid asset protection trust as the authority to sell now rests with the trustee (usually a named son or daughter). In essence, the Medicaid asset protection trust requires you to divest control of your property to another, thus moving your assets out of your available asset pool that would otherwise count against your Medicaid eligibility.
All trusts, irrespective of type, must address and prepare for several issues: (1) physical and mental incapacity of the trustee(s); (2) sufficiently describe the grantor’s instructions in detail; and (3) most importantly, a trust must be funded by some form of property and/or currency. You must be aware that trusts do not take effect until they are sufficiently funded; thus, if you pass before the trust is funded, your estate will go to probate as if the trust never existed.
We take great pride in representing our clients and meeting their estate planning goals. Costs are sometimes a concern; therefore, we regularly make reasonable monthly payment arrangements based on the client’s means.
Please feel to contact our office anytime at (845) 797-8786 or via email at agil@adg-law.com with any questions regarding your Estate Planning needs.
The Law Office of Andres D. Gil, PLLC
973 Route 22, Suite 3
Brewster, New York