Q: My 70-year-old brother is a named beneficiary in my Parents’ trust and will receive $120,000.00. I would like to ensure that this money can be preserved for his needs going forward – assisted living, nursing home etc. without affecting his current social security benefits. His wife is also receiving benefits of some sort. Neither are competent to manage their own affairs. (Ligonier, PA)
A: First question that needs to be known is, are your parent’s alive? Is your parent’s trust irrevocable? If so, what type of discretion does the trustee have in making distributions to trust beneficiaries? You really need to have the trust instrument examined by a competent estate or trust attorney.
Q: My Mother wants to change her “Will” to reflect the current state of affairs within our family while she is still of sound mind. My sister, the only other family member and the current Trustee, continues to hide behind an Irrevocable Trust written for our Mother signed in 2012. There is language in the Trust which allows Mom to remove and replace Trustees. However, my sister insists she will fight ANY attempt to change her legal status by using money from the Trust to thwart our Mother’s actions and intentions. Is this possible?
A: If your mother signed an “irrevocable trust”, she may not be able to revoke it. It all depends on the language of the trust. It sounds unusual that it is an “irrevocable trust” yet she retains the power to remove and replace trustees. I assume the trust holds most of her wealth? If so, you need an experience estate or trust lawyer to read the Trust Instrument and see what if any powers your mother has retained to revoke or change. If there is property your mother will pass on upon her death that is not included in the trust, she can dispose of that property by a will, so long as she is of sound mind to do so.
Q: My wife and I are in our late 70’s We have 3 sons and wish to avoid probate and estate taxes. Is a living trust with a quit claim deed proviso a safe way to give property to children? If so, is there a waiting period?
A: Do not do this on your own and seek an elder law attorney’s advice. Many more facts need to be known. A revocable trust may be a way to pass both real and property on to your children, but it is not good in every situation. If the waiting period you refer to is the dreaded 5 year Medicaid look-back, a revocable trust will not protect assets from Medicaid. You would have to transfer them into an irrevocable trust which is quit a serious decision to make as you lose total control of the asset. If your sole goal is Medicaid issues, you can just deed your real estate and transfer your personal property to your children, and wait five years, but such transfers could have significant tax consequences on your children.
Q: I am moving all my mom’s assets into Irrevocable Trust for Medicaid nursing home care purposes. I’m aware of 5 yr look back period. The PA Department of Public Welfare Medicaid worker informed me my mom’s $1300/month is too much to qualify for in home help but, nursing home help would be possible. Mom is healthy now but, SHE wants to plan for the future and so do us kids. So protect as much of her assets as much as possible should we place all of the following (IRA, paid for House, Life Insurance Policy, a small Savings Account) into an Irrevocable Trust? We could set the trust up to distribute $700/month automatically to my mom every month making her monthly income $2000 and then, when/if need arises, apply for Medicaid to help cover the rest of the nursing home expenses. Is this a workable plan? Thanks!
A: An irrevocable trust is one tool, among many that people use. If you are planning to move retirement plans into it, they need to be cashed out which often triggers income tax consequences which could make this move not advisable. To advise you thoroughly on this would require an in depth analysis of your mother’s entire situation including her complete assets, health, age, social security income, etc. I suggest that you meet with and Elder Law attorney to work on a blueprint as opposed to just doing this yourself.