Question: My husband and I (64 & 62 years old respectively) are currently in the process of planning for our elder care needs and it was suggested that we set up a Trust. Why would this be necessary – i.e., what are the advantages of setting up this type of legal document? We are financially secure and own our home, but we want to make sure that we plan appropriately for our future elder care needs so that our children don’t have to worry about paying for our elder care needs.
Answer: Your question is a difficult one to answer as the topics covered are very complex. In regard to the issue of a Trust, it is first important to know that there are many types of Trusts. Trusts are wonderful documents which provide many different benefits depending upon the type of Trust. It is important that you have an experienced Elder Law or Estate Planning Attorney review your current situation and your goals to properly advise you regarding Trust choices. A Trust should not be something off the shelf, but drafted to address your particular circumstances and goals. Among the types of Trusts which might apply to your circumstances are revocable trusts, various irrevocable trusts including income only trusts, and possible some sort of special needs trust.
The first question in the analysis would be to determine your primary goal. A revocable trust can avoid probate, be used to reduce or eliminate estate taxes, and to allow your children to assist you during your lifetime when you become incapacitated. As we age, and the likelihood of incapacity increases, a properly drafted Trust can make sure that you and your husband’s needs are provided, whether by your family or third party professionals. A trust such as this allows you and your husband to remain fully in control while you are capable, yet provides for a smooth transition when incapacity occurs.
If your primary concern is asset preservation and payment of elder care needs, it is possible that in addition to the revocable trust you might want to consider an additional irrevocable trust. An irrevocable income only trust can be used to put assets outside the reach of creditors while allowing you to maintain your tax benefits, the use of the property as well as any income generated from the Trust principal. If being done for asset preservation or potential qualification for Medicaid, it is essential that a detailed analysis of your finances be done to make sure that funds exist to provide for your care outside of the irrevocable trust should you become incapacitated earlier than expected.
An Elder Law Attorney will review these options and others with you to develop an overall plan best suited for your circumstances. The plan will undoubtedly include certain items such as durable powers of attorney, and may include others such as suggesting partnership long term care insurance. A trust or trusts offer you many options to achieve your stated goals provided that you work closely with your Elder Law attorney and have the documents drafted to meet you and your husband’s current and future needs and goals.
An excellent resource to find help with your family’s elder care matters is ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources for Families
James C. Siebert, Attorney at Law
The Law Office of James C. Siebert & Associates
Arlington Heights, Illinois