A comprehensive estate plan typically begins with the execution of a Last Will and Testament; however, in order to address the various goals and objectives that are usually found in an estate plan, additional estate planning tools and strategies are often needed as well. One of the most common of those additional tools is a living trust. Whether you are just now working on the creation of your estate plan, or are planning to review and revise your plan soon, you may wish to discuss how a trust can help you reach your estate planning goals with your Missouri estate planning attorney. In the meantime though, it may help you to familiarize yourself with three scenarios in which a living trust can help.

Incapacity Planning

The younger you are the more likely you are to believe that incapacity planning is not something you need to worry about because it won’t happen to you. Like many people, you may equate “incapacity” with Alzheimer’s or another old age related dementia disease. While it is true that Alzheimer’s is one common form of incapacity, there are numerous other ways in which you could become incapacitated long before you reach retirement age. You could suffer at least a temporary period of incapacity as a result of a tragic car crash, a debilitating illness, or a catastrophic workplace accident at any time in your life. In fact, your odds of suffering at least a temporary period of incapacity at some point during your working years is probably much greater than you realize. Consider this fact — if you are 20 years old right you stand a one in four chance of suffering a period of disability before you reach retirement age. If you do become incapacitated, for any reason, who will handle your affairs? Who will manage your finances? Who will make decisions for you? Absent an incapacity plan the answers are unknown. One extremely effective incapacity planning tool is a revocable living trust. ·

As an incapacity planning tool a revocable living trust works like this – you create the trust and name yourself as the Trustee along with appointing a spouse/parent/adult child as the successor Trustee. You then transfer all of your major assets into the trust. As the Trustee, you continue to control and manage all trust assets as long as you are capable of doing so; however, if you become incapacitated control automatically shifts to the successor Trustee without the need for any additional legal steps to be taken.

Medicaid Planning

Your odds of needing long-term care at some point in your life increase as you age – and the cost of that care is not cheap. During your working years you stand about a one in five chance of having to spend time in a long-term care facility as a result of an illness or injury. At age 65 your odds increase to about one in two and if you make it to age 85 you stand a 75 percent chance of needing long-term care before you die. At an average yearly cost of about $60,000 a year in Missouri, and an average length of stay of 2.5 years, affording long-term care can be a real challenge. Fortunately, the Medicaid program can help cover those costs; however, you must first qualify for benefits. To qualify for Medicaid benefits you must have income and assets that do not exceed the program limits. If your assets exceed the program limit you will be expected to rely on your available assets before Medicaid will start covering your long-term care costs. Transferring assets in anticipation of applying for Medicaid will not work either because Medicaid employs a five year “look-back” period that effectively discounts assets transferred made by you during the five-year period prior to your application. Medicaid planning can help. One common strategy used in a Medicaid plan is to transfer assets into an irrevocable living Medicaid trust. Those assets will then not be counted for purposes of qualifying for Medicaid; however, you may still be able to benefit from the interest earned from the trust and the trust assets will eventually be transferred to your designated beneficiaries.

Special Needs Planning

Estate planning for the parent of a child with special needs takes on a heightened importance because of the potential obstacles to gifting assets to that child. Once your child becomes a legal adult, assets you gift to your child will be counted when determining eligibility for important assistance programs such as Medicaid and SSI. A direct gift you leave to your child could result in the loss of eligibility for these much needed assistance programs. One way to eliminate the possibility of this happening is to include special needs planning in your overall estate plan. One tools often used when creating a special needs plan is a special needs trust.

A special needs trust, also referred to as a “supplemental needs trust”, is a specialized type of living trust that will allow you to gift assets to a special needs individual without jeopardizing eligibility for assistance programs. The trust assets may be used to supplement the care provided by federal and state programs and for specific things such as vacations, home furnishings, a vehicle, recreation, and even a personal care attendant.

Contact Us

If you have additional questions or concerns about living trusts contact the experienced Missouri estate planning attorneys at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment.