When properly designed and implemented, Irrevocable Living Trusts can provide an almost unsurpassed level of asset protection, keeping your assets safe from the high cost of long-term care. And, similar to Revocable Living Trusts, they spare your family the delays, frustration and expenses of the probate process.
Other reasons to utilize an Irrevocable Living Trust include:
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- Tax minimization
- Avoiding the risks of placing assets in the name of your children
- Protecting assets against predators, creditors, and lawsuits
Assets placed in an Irrevocable Living Trust can include a business, cash, investments, life insurance policies, and more.
Why an Irrevocable Living Trust Could Be Better than a Revocable Living Trust for Protecting Your Assets Against the Cost of Long-Term Care
The short answer is that under current Medicaid laws, assets in a Revocable Living Trust are not fully protected.
Why? Because any assets you place in a Revocable Living Trust are still available to you, the Grantor.
Therefore, Medicaid may determine that those assets must be used to pay for your long-term care. However, this is not the case with assets placed within an Irrevocable Living Trust, as long as it is properly designed and implemented to take into account the latest laws governing Medicaid eligibility.
How an Irrevocable Living Trust Can Protect Your Children’s Inheritance
When you transfer assets directly to your children, they typically become outright owners of the assets. They also become responsible for the risks associated with owning the assets. A properly drafted and implemented Irrevocable Living Trust will avoid:
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- Loss of inheritances due to lawsuits, divorce, remarriage, or the inability of your children to manage money on their own
- Gift tax liability
- Income tax consequences for your children
- Problems with getting financial aid to cover educational and other expenses for your grandchildren
To determine if an Irrevocable Living Trust is right for you and your family, contact us today for a consultation.
Contact the Estate Planning Attorneys at Deliberato Law Center
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