Estate Planning

Exploring the Benefits of Living Trusts for Seniors

Unfortunately, seniors are highly vulnerable to financial abuse and scams, often falling victim to exploitation by both strangers and, distressingly, even their own family members. That’s why it’s important that planning is in place to help seniors protect themselves and their assets.

As we age, it can become increasingly difficult to manage our assets. Most of us will need assistance at some point to help ensure financial resources aren’t depleted.

If you or an aging loved one are looking for ways to safeguard assets, a living trust is often a great solution. Living trusts allow seniors to rest assured that their money and property are managed by a trusted person.

What is a Living Trust?

Living trusts help protect and manage assets. They can be especially helpful for those who can’t manage their assets themselves due to age, illness, or disability.

Many seniors assume that a will is the only protection they need. However, wills only outline what happens to a person’s assets when they pass away. Living trusts are designed to safeguard the assets while a person is still alive. Furthermore, wills must go before a probate court, and taxes must be paid on inheritances. Living trusts allow beneficiaries to avoid probate after their loved one’s passing and can be designed to mitigate tax consequences.

To establish a living trust, the owner, or grantor, places money and property within the trust. The grantor then appoints a trustee to manage it and names beneficiaries to receive trust assets when the time comes.

Types of Living Trusts

There are different types of living trusts. Let’s look at two common types and how they can benefit seniors.

Revocable Living Trusts

A revocable living trust safeguards seniors by making it more difficult for family members to mismanage money or assets. The grantor (senior) can amend or revoke the trust at their discretion without the consent of the beneficiaries.

This type of trust allows the grantor to stay in control of assets by either serving as a trustee or appointing one. The grantor also appoints a successor trustee in the event they become incapacitated or die. This appointed person is then responsible for the management and dispersal of the trust’s assets.

Irrevocable Living Trusts

An irrevocable living trust can’t be changed or revoked by the grantor. This means the grantor gives up their rights to the assets once they’re transferred.

Seniors over 65 often choose to transfer assets into an irrevocable living trust to avoid having to dispose of assets to remain eligible for Medicaid benefits used to pay for long-term care services. Once assets are in an irrevocable trust, they can’t be counted for Medicaid eligibility purposes. A penalty for transferring assets to an irrevocable trust can occur if the assets are transferred within a five-year lookback period.

An elder law attorney can help determine the best way to set up this type of trust and transfer assets based on Medicaid stipulations. An irrevocable living trust can provide income for seniors and their spouses. It also protects their property and other assets from being seized to pay for medical costs without affecting Medicaid eligibility. This type of trust can also remain in place for a surviving spouse after the grantor’s death.

The sooner assets are placed in an irrevocable living trust, the better. If Medicaid is required in a  medical emergency, a penalty could be assessed on asset transfers and delay benefits, leaving you to pay your health care expenses out of pocket. An elder law attorney can explain the five-year lookback period when developing your trust.

Getting Help with Living Trusts

Ultimately, living trusts give seniors more control over their assets than a will, allowing them to set parameters and stipulations and appoint a trusted advisor to help them make decisions. If you or your loved one would like more information about setting up a living trust, we can help. Contact our estate planning and elder law firm today to discuss how we can tailor a trust to your specific situation and needs.

Please contact our Spokane office today or schedule a consultation to discuss your legal matters. We would be happy to help you and welcome your call.

No Legal Advice Intended. This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal issues or problems.