Estate Lawyer Explains How an Irrevocable Trust Can Be a Part of Long-Term Care Plan in New Jersey
January 18, 2021 at 20:19
Matus Law Group - Monmouth County, a law firm in Red Bank, NJ, that was established by estate lawyer Christine Matus, has recently published a blog post that explains how an irrevocable trust in New Jersey can be a part of an individual’s long-term care plans. In an irrevocable trust, once the creator of the trust has transferred assets into it, he or she will no longer be able to control those assets. The assets are now owned by the trust and only the trustee will be able to control them. Because of this, the assets in the trust are no longer part of the creator’s estate and the creator will no longer be liable for the taxation of such assets.
An irrevocable trust may help with long-term care, particularly with regards to Medicaid benefits. To receive Medicaid benefits, a person must comply with Medicaid’s narrow eligibility requisites for assets and income. The result is that many individuals have too many assets to be eligible for Medicaid benefits. However, the assets that have been placed in an irrevocable trust are no longer considered by Medicaid as part of the assets of an individual. The assets that a person puts in an irrevocable trust are no longer “countable” by Medicaid and it is possible to get Medicaid benefits.
It should be noted that other non-countable assets include: the person’s primary residence and rental properties; home improvements; personal property, including jewelry and furniture; life insurance; IRA and 401K accounts; pre-paid burial services; and assets that the individual has attempted to sell in good faith. Those who need to know more may want to consult with an estate lawyer like Christine Matus.
Meanwhile, the Matus Law Group - Monmouth County doesn’t advise people to gift their assets to their children instead for the purpose of getting Medicaid benefits. This is because Medicaid has a five-year look-back period for those that can be considered as a gift. For this strategy to work, the gifting of assets should have been done five years before in order to qualify for Medicaid.
Furthermore, there are a number of advantages of naming one’s children as beneficiaries of the trust rather than immediately gifting them the assets. First of all, in the event of death or a divorce, the children’s spouse may gain rights to those particular assets. Second, creditors will be able to seize gifted assets but not the assets in the trust. And finally, the trust will offer legal accountability for the family.
To establish an irrevocable trust, a trustee has to be named to take care of the investment of the assets held by the trust and make distributions. The creator of the trust will also name the beneficiaries who are given the rights to the distribution of trust income and/or assets. These can be modified during the course of the creator’s life.
It is important to note that the trust must be irrevocable so that it may not be counted as an asset for Medicaid or the Veterans Administration. The creator or his or her spouse cannot be the trustee. Those who can be a trustee include a child of the creator of the trust, other people, or corporations. Assets that can be used to fund the trust include real estate, a personal residence, cash, stocks, and bonds. Retirement assets such as 401k or IRA cannot be used to fund the trust.
Matus Law Group - Monmouth County has been in the business of offering advice to New Jersey residents for over 20 years with regards to estate planning or special needs planning services for both adults and children. The firm is composed of a team of experienced attorneys who can help and guide people on how they and their family can plan for life, cope effectively with death and disability, and preserve inheritances for succeeding generations.
Those who are interested in learning more about irrevocable trusts or require the services of an estate lawyer may want to check out the Matus Law Group - Monmouth County website, or contact them on the telephone, or through email. They are open from Monday to Friday, from 9:00 am to 5:00 pm.
For more information about Matus Law Group - Monmouth County, contact the company here:
Matus Law Group - Monmouth County
125 Half Mile Rd Red Bank, NJ 07701