Cona Elder Law


Do I Need a Trust?

As you plan for your future healthcare needs, what steps should you take to protect your assets? Should you set up a trust? If so, how do you know what kind of trust is right for you?

Types of Trusts 

There are many different kinds of trusts, each of which serves a different purpose. Some trusts reduce or eliminate estate taxes and other trusts are designed to avoid probate, such as when property is held in another state. A specific kind of trust is used for asset protection and specialized trusts are often used to manage money for minor children or for individuals with special needs. With that said, there are four basic types of trusts:

  1. Testamentary Trusts – Testamentary trusts are created in a will and do not hold any property until you pass away. 
  2. Living Trusts – Living trusts are created during a person’s lifetime and property is transferred into the trust right away.
  3. Revocable Trusts – Revocable trusts can be changed or terminated at any time during your lifetime.
  4. Irrevocable Trusts – Irrevocable trusts cannot be changed or terminated, except in very limited circumstances.

How to Protect Your Assets With a Trust

In order to protect assets, such as for Medicaid eligibility purposes, a living trust must be irrevocable. You cannot have access to the principal of the trust, but you can maintain the right to receive the income generated by the trust assets (dividends, interest, etc.). Almost any type of asset may be held in a trust, such as:

  •  Cash
  • Title to your home
  • Bank accounts
  • CDs
  • Stocks
  • Brokerage accounts
  • Mutual fund
  •  Annuities

The only asset which you may not want to transfer to a trust is a qualified retirement account, such as an IRA, 401(k) or 403(b).

Once five years pass, the assets held in an irrevocable trust are protected with respect to Medicaid. You will not be obligated to spend those assets on the cost of your care. Instead,

the assets will pass to your heirs and beneficiaries.

Protect Your Assets With Help From a Long Island Asset Protection Attorney

Planning ahead to protect your assets is always smart but the strategy will be different depending on your age, health, family composition, and total assets. It is never too early to plan and establishing an asset protection trust can be the first step. Reach out to an experienced asset protection attorney at Cona Elder Law to get started. 

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