One of the main goals our clients have is to protect and preserve assets for the next generation. Against that context, we provide an extensive amount of consultation surrounding Medicaid planning, particularly for those who cannot afford or do not want to pay in excess of $10,000 per month to the nursing home, and for those without long-term care insurance.
I wanted to provide a basic explanation of the Trust and give you five quick things to know about it, and provide some links for additional reading for those who are interested. It is a complicated topic, but here are my top five things you need to know to determine if this planning is right for you:
- You remain in control: Our Family Protection Trust is designed to allow you to maintain the maximum level of control over your assets the law will allow. This means you cannot distribute trust principal to yourself. A quick example may be useful: say your house is owned by the Trust, you can sell your house (see #2 below!), and you can even use the proceeds to buy or rent a replacement residence. However, you cannot sell your house and take the proceeds and go on a trip to Bali. There is a loophole (yay lawyers!) that allows you to distribute principal to a beneficiary, but you can't distribute it to yourself.
- You can still sell your house and other assets: As discussed above, if your Family Protection Trust owns your house or other assets, you have the discretion to sell those assets and purchase replacement assets. So if you want to downsize your home to a condominium, you can do that all within the confines of the Family Protection Trust.
- You don't need to file a second tax return: We prepare the Family Protection Trust so that it uses your Social Security Number for income-tax purposes. This means you retain all the tax benefits of your assets and there is no additional tax preparation fee or any additional taxes caused by the Trust.
- There is no ongoing cost: The Family Protection Trust is designed to be user-friendly and there is no ongoing maintenance costs to keep it going or to add assets to it later on down the road. This coupled with the lack of any additional tax reporting makes the Family Protection Trust the easiest way to protect and preserve assets for the next generation.
- Orderly administration at time of distribution: If nothing else, the Family Protection Trust allows you to avoid probate on assets titled to it at the time of distribution. It is important that all of the assets you want the Family Protection Trust to own actually are formally re-titled to the Trust, otherwise we may still need to probate your Last Will and Testament to distribute assets held in your name alone and not in the name of the Family Protection Trust.
This is just a quick snapshot of some of the reasons we love the Family Protection Trust for clients who desire some asset protection planning and want to preserve the resources they have worked their whole life to save. Contact us for more information or to discuss this planning in-depth.