| Single people
should consider conveying their assets into an Irrevocable Trust
managed by their child(ren). Such a trust: |
| 1. |
Starts the clock on
the 5-yr. lookback rule.
e.g. Single person conveys assets into a trust. Three years
later, this individual needs to go into a long-term care facility.
The family only needs to find a way to pay for that care for the
remaining two years of the lookback period. |
| 2. |
Eliminates estate
settlement entanglements if the single individual becomes deceased
while there are remaining monies in the Irrevocable Trust. |
| 3. |
Removes assets from
the parent's name into an Irrevocable Living Trust charter. Does not
become the childrens' asset until the parent dies. |
| 4. |
Once created, the
by-laws and inheritance provisions
cannot be changed (thus, the term "Irrevocable.") |
| 5. |
If properly drafted,
is immune from parent's creditors and children's creditors.
|
| 6. |
While in existance,
the trust is immune from
any divorce ramifications of alimony, child
support, property settlement, etc. involving
the children. |
| 7. |
Assets placed in the
trust DO NOT count against
the children when they are seeking college aid
or assistance for their own children.
|
| 8. |
Gets its own taxpayer
identification number
(similar to Social Security Number). Will
not have to pay any income taxes unless
there are liquid assets in the trust which
earn interest. |
UPON DEATH
Assets in an Irrevocable Trust do not have to go through probate
or estate settlement. The assets in the trust cannot be encumbered
by a death tax lien.
The Irrevocable Trust is dissolved by the Trustee writing checks to
each beneficiary on the death of the parent.
IRREVOCABLE TRUSTS FOR MARRIED COUPLES
Irrevocable Trust work for married couples as well. They are not
used as often, because married couples are granted more leniency by
the Medicaid code.
Single people, however, do not have many exceptions to the 5-yr.
lookback rule. It may be the only major legal device for them to
seek shelter.
Contact us for further information on Irrevocable Trusts, and how
they fare under the Medicaid code and tax code.
|
