Can A Trust Protect Assets?

Justin, My mom and dad created a trust about twelve years ago. Almost everything they own is titled in the name of that trust. That should mean their assets are safe even if they need long-term care one day, right? – Bev

Bev, while I can’t be sure without having a lot more details, it is extremely unlikely that your parents’ trust was written to include all the provisions necessary to shelter their assets against the costs of long-term care.

Your thoughts are in the right place. With long-term care costs constantly on the rise, it is very important to plan ahead to cover those costs without having to liquidate assets to pay out of pocket. There are several government benefits available that are specifically designed to help offset the costs of long-term care, but it is difficult to qualify for those programs without advance, specialized planning.

Most trusts are revocable, meaning they can be changed at any time. Unfortunately, no government benefit program allows a revocable trust to serve as a shelter for assets against the costs of long-term care. Some irrevocable trusts can work for that purpose, but even with irrevocable trusts, very particular additional terms must be included to satisfy the asset tests applicable to the government benefit programs your parents would hope to take advantage of. When engaged in typical estate planning, most clients do not seek out a trust designed to protect assets against the costs of long-term care, and most attorneys don’t write those types of trusts, anyway.

Chapter eight of the book, You Need A Plan, is a great resource for information on trusts that can shelter assets against long-term care costs. It also explores some of the negatives associated with irrevocable trusts that can be minimized if you know what you’re doing. Order your free copy at YourPlanMatters.com. And don’t forget, a no-charge strategy session is just a phone call away.