A trust, or legal instrument that transfers title from an owner to a trustee to administer on behalf of the beneficiaries, can complement financial planning in a variety of areas: retirement, long-term care needs, and estate plans. A law firm that focuses on estate and long-term care planning can help you create trust terms that will fit your specific needs.
As background, certain types of trusts function differently. In a revocable trust, the owner retains legal control over the assets, and consequently can be named as both the trustee and the beneficiary. Although this trust does not offer tax benefits to the owner, it will avoid the hassle of probate after the individual's passing.
In an irrevocable trust, the owner no longer retains control over the trust principal. This type of trust has traditionally been utilized for its tax benefits. Before 1993, individuals who did not qualify for Medicaid's income limits also used this trust to remain eligible for Medicaid or long-term coverage.
Federal rules changed after 1993, and now only two types of "special purpose trusts" are recognized for holding assets transferred by a potential Medicaid beneficiary. Of course, an individual may create other types of irrevocable trusts, to accomplish specific goals in an estate plan.
This discussion underscores the importance of consulting with a law firm that focuses on long-term care, estate planning, and Medicaid law. Our Pittsburgh attorneys have the experience to review your specific situation and advise whether revocable trusts, irrevocable trusts, asset protection trusts, charitable trusts, or other tools might fit your needs.
Source: FindLaw, "Setting up a Trust," copyright 2017, Thomson Reuters