A trust is a legal entity you create to hold your “stuff” for yourself and future generations. It can be revocable, irrevocable, for life insurance, for charity, to protect from Medicaid claims and for so many other reasons. If you ever heard the term Medicaid Trust and wondered how it works, I will explain more about that below. Long story short, there are many ways and situations a trust can be set up for. Let’s get into them.
Revocable Trust: This is trust that you create for your benefit that is revocable or able to be reversed during your lifetime and the lifetime of your spouse. This trust usually holds your home, bank accounts, cars and is the beneficiary of assets that cannot be owned by a trust during your lifetime (IRA’s and 401(k)’s for example). You can determine the beneficiaries during your lifetime and after you pass. You can use the trust to avoid probate and to hold your assets in one ‘pot”. It also allows you to make distributions to your secondary beneficiaries – think kids and grandkids – on your timeline. This is the least restrictive trust you can establish.
Irrevocable Trust: This is a trust you create for yourself or someone else that cannot be revoked or cancelled. This is used in Medicaid planning to create a “Medicaid Trust”. It is also used to extend the time a beneficiary who is not your spouse or disabled child to take distributions from your IRA’s under the new SECURE Act requirements, An irrevocable trust can help protect from a surviving spouses next spouse and put limits on distributions.
Life Insurance Trusts: These trusts hold your life insurance policies and can help you protect the benefits form them by setting up distribution timelines as well as help use some of the premiums paid n them for tax purposes.
Charitable Trusts: These are trusts you set up to support your charities after you pass. You can fund then during your lifetime or have assets transfer into them upon your death.
There are so many trust options to protect you and your family and keep your assets out of out of the jurisdiction of the Probate Courts. Working with an experienced trust attorney to find the right trust or estate plan for you is the best way to ensure that your family or charity gets the benefits of your life’s work and savings. Whether it’s a Medicaid Trust or a standard revocable trust, contact Moseman Law Office for an appointment to discuss your options.
Medicaid Trust Attorney