PB Elder Law is the only firm in WNY whose practice is dedicated to elder law. Mel talks with attorney Linda Stravalaci Grear, a partner in the firm about living trusts. She says a living trust is a legal document a lawyer would prepare to hold onto assets for you. That trust can benefit you for the duration of your entire life and after you die it would distribute out to who you named as your beneficiaries.
There are different kinds of living trusts. Grear says under the general umbrella of a living trust there is a revokable and an irrevocable trust. A revokable trust is as it sounds. It is revokable, amendable and you can change it and it is really just an extension you yourself. An irrevocable trust is the opposite. It is something we create, we put assets and we can’t unilaterally change it on our own.
Both types of trusts, revokable and irrevocable can avoid probate. Both types of trusts will bypass having to go to a court proceeding which is the probate process. Both types of trusts will allow you to establish controls on how your heirs will inherit and you can put all those controls in place. Grear says the major difference between the two is protection from a nursing home. So, a revokable trust, because it is an extension of you, and uses your own social security number and is freely accessible by you doesn’t give you any protection from a nursing home. She says that’s where we would actually be looking to an irrevocable trust.
Whenever you are talking about protecting assets from some sort of long-term care, we have to worry about the fact that there is a five-year look-back period. This five-year look-back period that exists is essentially a period of time from the date when you applied for Medicaid and you look back. Medicaid is going to be looking to see if you gave away any of your assets. Essentially, what they are looking to see is did you have assets and then divest yourself of assets or give away assets so you can become eligible for Medicaid. If you did it more than five years ago they can’t even ask you about it but if you did it in that five year window we do need worry about the fact that they will impose a penalty and we have to calculate what that is and plan appropriately for that.