Follow Andrew Linkedin Twitter Facebook
Email Andrew Email
Legal Issues
Jun 26, 2017

Trusts As A Tool In Long-term Care Planning

Sponsored Content provided by Andrew Olsen - Elder Law Attorney, CSH Law

Trusts are commonly used in estate planning for a myriad of reasons, like avoiding probate or ensuring assets are managed for beneficiaries.  However, certain trusts are also useful tools in planning for long-term care. 
 
The monthly cost of nursing home care in North Carolina can easily exceed $8,000 to $10,000. These nursing home costs can impoverish even the most fiscally responsible families. Many families prefer to avoid spending all their hard-earned money on nursing home care. This can be particularly important to a family hoping a spouse will also be able to reserve significant funds as they grow older. 
 
With advanced planning, trusts are the foundation for a secure long-term care plan that: (1) ensures assets are preserved for the future needs of a spouse or to leave a legacy gift to loved ones; (2) assists family members in qualifying for public benefits; and (3) protects assets from expected or unexpected nursing home costs.
 
Generally, trusts used for long-term care planning are drafted to be irrevocable and cannot be amended or revoked. When a trust is created, assets the grantor seeks to protect are transferred into the trust and retitled in the name of the trust. Any assets transferred into the irrevocable trust are no longer assets that are available to the grantor (the person who funds the trust). 
 
Ideally, the grantor makes a gift of these assets to the trust in return for an expected stream of income. The grantor is then entitled to receive all income or dividends generated by the trust assets. However, with a properly drafted irrevocable trust, the grantor cannot directly receive principal from the trust. If the principal were directly accessible, then the grantor would not be eligible to receive Medicaid. In this manner, trust assets can be preserved for a spouse or for future generations while still providing a regular stream of income to the grantor and also allowing the grantor to eventually qualify for public benefits.
 
An irrevocable trust can be used to shelter real estate and other investments, or just real estate only. In many cases, when real estate is transferred into an irrevocable trust, the grantor may retain the right to use the house or reside in the house.
 
In this scenario, when a home is placed in a trust, under current laws, the home is not subject to estate recovery after a Medicaid recipient passes away. In sum, the home or other real estate can be passed along to loved ones instead of being sold to repay Medicaid for any nursing home care.
 
Implementing trust strategies for long-term care planning is a complex process that varies by state. Further, every family has unique circumstances, which is why an experienced elder law attorney is needed to make a competent evaluation. With advance planning and careful guidance from an elder law attorney, families can learn whether an irrevocable trust is an appropriate long-term care plan for their own unique circumstances.

Andrew Olsen is an attorney in the CSH Law Elder Law Practice Group in Wilmington, NC, where he practices in the areas of elder law, estate planning probate, guardianship, alternative dispute resolution, estate and trust litigation, special needs planning and veteran’s benefits. To contact Olsen, call (910) 777-5733 or email him at [email protected].

 

Ico insights

INSIGHTS

SPONSORS' CONTENT
Tommytaylor ceo unitedway

Leadership Circles

Tommy Taylor - United Way
Cflc kellygosssechristheadshot

Raising Money In Troubled Times: 6 Ways You Can Help

Kelly Goss Sechrist - Cape Fear Literacy Council
Brochurepicture 7312020434

Answers To Common Questions About Insurance

Creighton Hayworth - Ameriprise Financial

Trending News

Wilmington Downtown Inc. Announces New CEO

Cece Nunn - Dec 3, 2020

In Downtown Wilmington, New Office Space Emerges Inside Historical Building

Cece Nunn - Dec 2, 2020

Tama Cafe Closing On Military Cutoff Road In Wilmington

Jessica Maurer - Dec 2, 2020

County Tier Downgrade Could Help More Money Flow Into The Region

Christina Haley O'Neal - Dec 1, 2020

Commercial Space Changing To Residential In Leland Mixed-use Project

Cece Nunn - Dec 3, 2020

In The Current Issue

Novant Health Raises Minimum Wage To $15

More than 2,000 Novant Health employees will get a pay raise in January when the Winston-Salem-based health care system raises its minimum w...


Area So Far Immune To Worker Shortage

Wilmington-area hospitals have not had any major worker shortages during the pandemic, officials said, unlike other parts of the country....


Resourceful Aging

Working through retirement, opting to stay at home or choosing a retirement community are just a few of the trends and issues facing retired...

Book On Business

The 2020 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

2020 Leadership Accelerator: Virtual Workshops for Real Leaders
2019 Health Care Heroes
August 26, 2019 Power Breakfast: A Healthy Sale?
2019 WilmingtonBiz Expo Keynote Lunch - CEO, nCino, Pierre Naude`