Karen Ann Ulmer, P.C.
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Irrevocable Trusts

A trust is a mechanism wherein assets are set aside for certain beneficiaries and managed by a trustee subject to the terms of the document. Irrevocable trusts cannot subsequently be modified or terminated. Irrevocable trusts can help protect assets for parties who may need long-term care. Elderly persons needing long-term care often try to utilize Medicaid to assist with the expenses. Medicaid is a need-based health care program so there are limits on the amount of income and assets a party can have when seeking eligibility. An individual should plan ahead to make sure any countable assets and income are structured so as not to affect any future applications for Medicaid. Medicaid can look back five years from the date of an application so it is important to do any relevant estate planning well in advance.

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An irrevocable trust must be established prior to the five-year look-back period to avoid any penalty. Additionally, the beneficiaries of the trust cannot be the party needing care or their spouse. The children can be named as beneficiaries with the hope that they would utilize the assets to assist their parents as needed. This does come with some risk as the trust cannot specifically limit the children in this manner so the children would need to be trustworthy. It can also be problematic if the party is subsequently released from care and now needs to support themselves again. You should consult with an experienced estate planning attorney regarding the best options for your circumstances.

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