Irrevocable Living Trusts

Living and irrevocable trusts are used for various reasons like asset protection, estate tax protection, estate planning, and to avoid assets going under the name of a child.  There are many different legal considerations when it comes to trusts and the language of the document itself is crucial to the proper distribution of assets, protection of Medicaid rights, and protection of the beneficiaries. 

Since the state and federal Medicaid programs have stringent requirements pertaining to trusts, it is important to consider all of the details to avoid getting disqualified from Medicaid.

There are advantages and disadvantages to using an irrevocable trust over a revocable trust.  Below are some of the advantages of an irrevocable trust:

  • •Each spouse can obtain the federal estate tax exemption through an irrevocable trust with the correct language.

  • •The designated trustees can manage the trust with little or no difficulty in the event that the grantor is experiencing an incapacitating illness or state.

  • •Asset protection for healthy family members

  • •Probate avoidance

  • •Avoidance of placing assets in a child’s name

  • •Estate tax planning

  • •Peace of mind

Below are some of the disadvantages of an irrevocable trust:

  • •Grantor loses control over and access to the principal of the assets in the trust.  For all intents and purposes, the assets belong to the trust and not the grantor.  In the event of an emergency, the grantor does not have access to the assets in the trust as a ‘financial safety net’.

  • •Setting up an irrevocable trust can have a high-cost and should be thoroughly considered before moving forward.

  • •Without the proper caution and legal advice, one runs the risk of being disqualified from Medicaid.

As with any huge life decision like drafting a trust, consulting with an attorney is important to make sure that one knows all of the important details.  Legal issues require specific attention to detail to ensure that the purpose of a document is carried out in the language that is conveyed. We look forward to working with you to find the best irrevocable trust solution for your specific situation.

Irrevocable Living Trusts Resources

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