Friday, June 27, 2014
Many people fail to realize that the scope of estate planning extends far beyond that of a simple will. Estate planning includes powers of attorney, health-care proxies, living wills and trusts.
Not only are trusts beneficial for transferring assets to beneficiaries upon death, but they also provide for the grantor during their lifetime. Hence, living trusts can serve as a form of disability planning because the grantor appoints a trustee who is in charge of the trust if the grantor becomes incapacitated. If you do not have some form of long term care insurance, the best approach is to use a MAPT to protect your assets from nursinghome costs.
For purposes of elder law estate planning, the most common trust for disability planning is the Medicaid Asset Protection Trust (MAPT). Two rules apply to MAPTs: first, you may not be your own trustee; second, you are only entitled to income and not principal. Because you do not have access to the principal, nursing homes do not have access to it either. The assets must be in the trust for five years, pursuant to the “five-year look-back period,” before they can be protected from any nursing home costs.
A MAPT will not affect your lifestyle. You will still receive pension and Social Security checks and have the right to use your home while keeping property tax exemptions.
See Bonnie Kraham, Trusts Provide Several Benefits, Record Online, June 26, 2014.