Over the years, we all acquire important assets: houses, cars, and more. And as our loved ones age, it is important to protect their assets. But, this is an incredibly tough conversation to have.

At the Care Assistance Center, we help families plan for these conversations and set up the right types of estate plans and trusts. One of the trusts that we suggest to our clients the most are irrevocable trusts.

3 reasons we suggest irrevocable trusts for our clients who are aging are:

  1. Protecting the Assets: During the lifetime of the person putting their assets into the irrevocable trusts, the assets in the trust are protected from lawsuits (with some exceptions). However, when they pass away, the assets go directly to the beneficiaries. Additionally, the assets won’t go through probate.
  2. Tax-Free: Once investments go into an irrevocable trust, they are not able to be taxed for the estate tax, provided more than three years have elapsed since the accounts or money was moved in. When the beneficiary receives the assets, they will not be charged an estate tax. (Some weird states may have an inheritance tax on the recipient).
  3. Medicaid Impact: When many individuals age, in order to qualify for Medicaid, must “spend down” or give away their assets in order to qualify for the care they need. An irrevocable trust can protect assets from the dreaded “Medicaid Spend Down” five years after the asset was transferred in.

There are a handful of more considerations to think through and questions to ask before deciding on irrevocable trusts, and it is only one tool commonly used in care assistance planning. It is important to consider the assets that need to be protected, the amount of care the individual will need, and the potential beneficiaries.

If you or your family is going through this decision-making process, ask for an experienced team to help make these decisions. Contact our team at the Care Assistance Center to set up a time to discuss your situation.