The Mount Clemens trust administration attorneys at our firm are deeply committed to the financial well-being of our clients and their families. There is no reason why people that are not involved in the estate planning profession would understand all of the different types of trusts that exist and why you may want to use one rather than another. Each situation is different, and this is why personalized attention is so very important.
We place an emphasis on client communication, so you can rest assured that all of your questions will be answered, and at the end of the process, you will be able to make fully informed decisions. In this blog, we will look at two different types of trusts that can be utilized, and we will explain the rest of them in future posts.
Most senior citizens will qualify for Medicare as a source of health care when they reach the eligibility age, which is 65 at the current time. This government program will assist with health care costs, and it will cover convalescent care after an injury or surgery. However, Medicare will not pay for custodial care. This is the type of care that you would receive in a nursing home or assisted living facility.
If you are thinking that it is unlikely that you will ever need help with your activities of daily living, you may want to reconsider your perspective. The United States Department of Health and Human Services maintains a very useful website for people that are looking ahead toward the future called LongTermCare.gov.
According to their site, seven out of 10 people that are turning 65 on any given day will eventually require living assistance. So if you expect to live long enough to qualify for Medicare, it is quite likely that you will need living assistance at some point in time. Of course, you can simply pay out-of-pocket if you ever move into a nursing home, but if you do, you better have extremely deep pockets.
Our trust attorneys work out of our office in Mount Clemens, Michigan. In our city, the average annual cost for a private room in a nursing home is somewhere in the vicinity of $100,000, and it is not uncommon for people to spend multiple years receiving nursing home care. Many elders in nursing homes have Alzheimer’s disease, and it strikes upwards of 40 percent of individuals who are 85 years of age and older.
Medicaid is a jointly run federal/state government program that does pay for long-term care. In fact, most of the people in nursing homes are relying on Medicaid to pay for their care, and many of them were never poor. There is an asset limit of just $2000 that you must stay within to qualify for Medicaid, but some things that you own don’t count.
To aim toward Medicaid eligibility when the time is right, our trust attorneys can help you establish a Medicaid trust. You would not be able to touch the principal, but you would be able to access the earnings from the trust if the income does not push you over the Medicaid income limit.
Speaking of income, there is another type of trust that can be used during the Medicaid planning process called a Miller or qualified income trust. If your income exceeds the amount of the eligibility threshold, you could funnel all or part of it into this type of trust to get it out of your name so you can qualify for Medicaid.
Revocable Living Trust
A revocable living trust is an asset transfer vehicle that can be a good alternative to a last will. The person that establishes this type of trust is called the grantor, and the grantor will name beneficiaries that will receive distributions from the trust after the grantor’s passing. There will also be a trustee named in the trust agreement. It can be an individual, but many people use a professional fiduciary like a trust company, or the trust department of a bank.
In this agreement, you can instruct the trustee to distribute assets on a limited basis over an extended period of time to prolong the viability of the trust. You can also empower a disability trustee to manage the assets in the event of your incapacitation, and this is another advantage. Plus, assets in a revocable living trust can be transferred outside of the lengthy and expensive process of probate.
Attend a Free Seminar!
Our Mount Clemens trust administration attorneys are conducting a series of seminars over the coming weeks. To see the schedule and reserve your seat, click the following link: Mount Clemens Estate Planning Seminars.