Lifetime Trust Planning

CLICK HERE TO VIEW OUR VIDEO “THE USE OF TRUSTS AND TRUST PLANNING”

Once the client’s testamentary estate is protected, trusts should be used for lifetime planning. Qualification for Medicaid public benefits continues to allow transfers by an individual, typically to the same beneficiaries/children as the will. The child may elect to establish a living Supplemental Benefits Trust (SBT). While transfer planning is subject to the Medicaid five-year look-back, the penalty need not be five years and certain “sole benefit of” (SBO) trusts are not subject to the Medicaid 5 year look-back penalty, provided the funds are paid out over the beneficiary’s lifetime. Further, the amount that is transferred to an SBO trust is not countable should the parent or grandparent funding the trust or the trust beneficiary need future Medicaid or public benefits, provided the trust meets the complicated rules imposed by Medicaid law.

Another example of a lifetime trust is a special-needs trust (SNT) funded by a claimant after an auto accident, malpractice or court award or by a disabled person. This is a self-funded trust with the recipient’s own funds. Although the trust provides the benefit of not being countable should the recipient seek public benefits, the trust requires that upon death any balance must repay any public benefits paid, unless the trust has fully paid out during the beneficiaries’ lifetime.

While these techniques are legal and available, they will not be found in form books or on LegalZoom on the internet. A certified elder law attorney has the knowledge and expertise to “dot the i’s and cross the t’s” necessary to do the trust right … the first time.

Common Trust Myths

• Trusts have too many rules that impair my access to the funds – Wrong: In fact, subject to conforming with certain legal provisions, you make the rules for the trust.
• You need a revocable trust to avoid the high cost of probate – Wrong: This is the mantra of trust mills selling “one size fits all” trusts that insert your name into the boilerplate documents. The usual cost of probate in N.J. counties is under $200. Whereas the cost of a revocable trust is $2,000. Not a wise investment!
• Macri & Associates, LLC‘s mantra — “Preserve your assets … without losing control.” How? By use of the appropriate tailored trusts described above.

Vince Macri is one of 450 attorneys nationwide who are certified in elder law (CELA) by the National Elder Law Foundation.

For more information, contact our East Hanover lawyers online.