Living trusts help you protect your assets and make sure they are able to be managed if you become incapacitated. According to the Alzheimer’s Association, one in three seniors dies with Alzheimer’s or some type of dementia. Over 70% of those 60 or older will require long term care before they die. Illness or injury can strike at any time and can strike anyone of any age. If you do not have a plan to ensure someone can manage your money and property, your incapacity could create tremendous financial and legal complications and put your nest egg at risk.
Creating an incapacity plan should be done early because once illness or injury strikes it is too late – and you can never plan for an unexpected illness or accident. You need to make sure you choose the right type of incapacity plan for your needs. A lawyer at Parman & Easterday can assist you and ensure you have the right incapacity plan and the protections you need and expect.
How Living Trusts Can Help If You Become Incapacitated
There are different approaches to dealing with incapacity. Some people create a durable power of attorney. Some do not create any type of advanced plan at all, leaving their family members struggling through guardianship. Guardianship proceedings involve going to court, convincing the court of incapacity, and having someone named as a guardian.
You do not want your loved ones to have to go through guardianship, especially since the wrong someone could be chosen as guardian and because the proceedings are complicated and expensive. While creating a durable power of attorney is important, it alone may not be enough. Living trusts are another option for a comprehensive disability plan.
When you create a living trust, you transfer money or property into the trust name. The trust becomes the owner, while you retain possession of the property. Typically, you serve as trustee and manage and oversee the trust assets. You also name a successor trustee who steps in if you become incapacitated. The successor trustee has a fiduciary duty to act in the best interests of the trust beneficiaries and to make sure assets are properly managed and informed decisions are made regarding trust property.
When you have created a living will and the successor trustee steps in because of your incapacity, he or she can do everything necessary to grow and protect the trust property. This trustee can transfer trust property to beneficiaries if you pass away. Both you and your heirs are protected as the trustee manages the assets while you remain alive and incapacitated and then helps your heirs receive their inheritances after you are gone.
Be aware there are limitations on how much living trusts can help you in case of incapacity. Living trusts do not protect you from having to spend down your assets if you enter a nursing home. The assets owned by the living trust still count for purposes of Medicaid eligibility and render you ineligible for Medicaid assistance in paying for your nursing home care until you have spent most of your money and sold some of your property.
There are other estate planning tools that can help you avoid having to spend down your assets in this situation. Please talk with one of our experienced elder law attorneys to see if one of these other tools might be a better or additional option along with a living trust.
Get Help Creating a Trust from an Estate Planning Attorney
Parman & Easterday has helped thousands of clients create living and other types of trusts that allow them to avoid estate taxes and qualify for Medicaid sooner without spending down all their assets. If you want to ensure you have a comprehensive incapacity plan in place, give us a call today at (405) 703-9987 or (913) 385-9400, or contact us online to speak with our lawyers. You can also learn more by joining us for a free seminar.