by Bill Miller | Oct 18, 2021 | Estate Planning, Medicaid, Medicaid Planning, trust
Studies have shown that almost 70% of adults turning 65 will need long-term care at some point during their lifetimes. While long-term care is an amazing resource to many Americans and their families, it is also extremely expensive and can cost around $266/day in the state of Alabama. However, if you are eligible, Medicaid can help pay for long-term care. While Medicaid’s income and asset restrictions are strict, there are estate planning tools—like the Medicaid Asset Protection Trust—that can help you qualify for Medicaid, while also preserving your life savings.
What is a Medicaid Asset Protection Trust?
A Medicaid Asset Protection Trust (MAPT) serves to protect your assets if you or your spouse needs long-term care. A MAPT is designed to help you avoid draining your assets if you don’t have long-term care insurance, but need to pay for nursing home care.
Medicaid pays for long-term care, but it can be difficult to qualify…which is where the MAPT steps in to play. To qualify for Medicaid, the state will generally look at your income and assets. If you’ve worked hard to obtain a healthy savings account and own your home, you may not qualify, unless you spend down your assets. A MAPT, however, allows you to avoid that potential scenario.
How Does a Medicaid Asset Protection Trust Work?
A MAPT is a type of irrevocable trust, which means that once you place your assets in the trust you cannot take them back out. The type of assets you can include in a MAPT are:
- Savings Account
- CD’s
- Investments accounts
- Cash value life insurance policies
- Your primary home and other real estate
Benefits of a MAPT
The main benefit of a MAPT is that it protects those assets placed into the trust so they are exempt when you attempt to qualify for Medicaid. When a couple has to spend-down their savings and assets, this can shrink the size of the estate that is left to a surviving spouse or family members. Selling off assets can also have certain tax implications if you’re required to pay capital gains on the sale. A MAPT allows you to avoid these situations.
Special Considerations to Keep in Mind
While MAPTs are put in place to help you protect your assets in order to qualify for Medicaid, it’s important to remember the look-back period. The look-back period for Alabama is 60 months prior to your Medicaid application date. So, if you want to use a MAPT to protect your assets, then it’s wise to create one sooner rather than later.
Another important consideration is that this type of trust is irrevocable, which means that once assets are placed in the trust, they cannot be taken back. It is vital to ensure that you are comfortable with the permanent transfer of your assets into this trust.
Talk with an Estate Planning Attorney
Everyone has a unique financial situation and estate planning needs, so it is extremely important to talk to an estate planning attorney who can help you understand all of your options, and which may be best for you, your family, and your assets.
If you have questions about creating a Medicaid Asset Protection Trust—or an estate plan altogether—we encourage you to contact Miller Estate & Elder Law at (256) 251-2137 or register for one of our free estate planning workshops.
Contact Miller Estate & Elder Law
by Bill Miller | May 15, 2020 | Blog, Long-Term Care, trust
According to LongTermCare.gov, almost 70% of people who are 65 years of age at this time will need long-term care at some point in their lives. Such care is expensive and could deplete a lifetime of savings in just a few years. People may be able to both pay for their long-term care and leave money for their heirs by establishing trusts for long-term care planning.
Medicaid Requirements
Many people hope that Medicaid will pay for their long-term care. However, Medicaid only pays for people with limited income and few resources. Applying can be difficult as applicants are required to submit numerous supporting documents.
Another important thing to remember is the Medicaid 60-month look back period. Medicaid reviews an applicant’s financial records for the 60 months before the date of application. Financial transactions made during that time, including transfers to a trust, may cause a delay or reduction in benefits. That’s one reason it’s important to start planning now. A trust may be in your future.
Irrevocable Trusts for Long-Term Care Planning
Please note that there are two general types of trusts: revocable and irrevocable. Revocable living trusts are common. However, they typically do not provide any kind of asset protection and are not helpful for long-term care planning.
Instead, consider establishing an irrevocable trust. This type of trust transfers control of the grantor’s assets to a trustee. In effect, the grantor no longer owns the trust assets. Medicaid generally does not count the funds in an applicant’s irrevocable trust toward the applicant’s resource or income requirements.
Plan Ahead to Pay for Long-Term Care
We don’t know what the future holds or how long it will be until we need long-term care. To prepare for your future, talk to an attorney about trusts for long-term care planning today.
The attorneys at Miller Estate and Elder Law assist their clients with Medicaid and long-term care planning, as well as general estate planning. Contact Bill Miller at 256-251-2137 to schedule an appointment. Though our office is now located at 818 Leighton Avenue in Anniston, we serve clients in Gadsden, Hoover, Talladega, Vestavia Hills, and surrounding areas.
Also, download a copy of our free e-book, Don’t Go Broke Paying for Long-Term Care, by clicking here.
by Bill Miller | Jan 30, 2020 | Asset Protection, Blog, Estate Planning, trust
Revocable living trusts are very common today. They are known as a flexible way to manage your assets and a way to avoid probate. However, there are other little known facts about revocable trusts that you may need to know. As you develop your estate plan, consider adding a revocable trust.
Revocable Trusts Can Be Funded with Almost Any Asset
Once a trust document is signed, the grantor needs to transfer property to the trust. This is called funding the trust. Many people assume cash or real estate are the only assets that can be used to fund a trust.
However, the ownership of just about any asset can be transferred to a revocable trust. Along with cash and real estate, the grantor can transfer jewelry, art collections, boats, cars, business interests, and investments. Talk to your attorney before transferring assets. Some property can be passed to your heirs through other means, like beneficiary designations and joint property ownership.
Only Very Wealthy People Benefit from Revocable Trusts
This statement may be one of the primary reasons people don’t talk to an attorney about revocable trusts. Actually, revocable trusts are useful to people of modest means. Some of the more common reasons to form a revocable trust include:
- Incapacity Planning – If you become incapacitated while serving as trustee, your successor trustee can take over immediately. There’s usually no need for a conservatorship.
- Protecting Your Children – Maybe your children are minors and cannot inherit directly or perhaps one of the kids cannot be trusted with a lump sum inheritance. A revocable trust can dole out the inheritance in smaller payments. In addition, you can give the trustee the ability to pay an adult child’s bills instead of handing over cash.
A Revocable Trust Usually Remains Private
When you file a Will, it becomes a public record that anyone can view. The same is true for most documents filed in a probate case.
However, a revocable trust typically does not have to be filed with the Court. As such, the contents of your trust should be kept confidential. One exception that could cause your trust to go public is if someone files a lawsuit involving your trust. Even then, it might be possible to shield some or all of the details from public scrutiny.
Find Out More About Revocable Trusts
Often, people think they will not get any benefit from a trust. However, many of those same people would be amazed to learn how revocable trusts help people every day.
The attorneys at Miller Estate and Elder Law help their clients make informed, thoughtful decisions. Contact Bill Miller at 256-251-2137 to schedule an appointment. Though our office is now located at 818 Leighton Avenue in Anniston, we serve clients in Gadsden, Hoover, Talladega, Vestavia Hills, and surrounding areas.
Also, check out the free legal resources on our website!
by Bill Miller | Nov 18, 2019 | Blog, trust
As Tom and Jessica worked on their estate plan, a friend suggested the look into creating a trust. Tom laughed because, obviously, on rich people need trusts. However, he and Jessica started researching trusts and learned, to their surprise, that many people can benefit from adding a trust to their estate plan.
Trusts, a Common Estate Planning Tool for the Masses
People can talk about trusts all day long, but not really understand them. One definition of ‘trust’ states that it is “an entity created to hold assets for the benefit of certain persons or entities with a trustee managing the trust . . .” What this really means is:
A grantor (also known as a settlor) signs a trust document creating the trust and naming a trustee to manage the trust assets for one or more beneficiaries.
Some trusts can be changed easily (revocable), while others are difficult or impossible to alter (irrevocable). One thing common with all trusts is that they have to be funded, that is, have assets transferred to the trust.
Sure, Some Rich People Need Trusts, but not Only Rich People
Some trusts actually are more suited for people who have to worry about handling their high net worth. However, there are options that suit the rest of us:
For example, revocable living trusts offer benefits that don’t require wealth:
- Probate Avoidance. No matter the size of your probate estate, avoiding probate is usually best. When you transfer your assets to a revocable living trust, they may pass directly to your heirs without the need for probate.
- Avoid Guardianship or Conservatorship Proceedings. Again, this is not a “rich person” thing. Anyone can become incapacitated and need a trusted person to care for them.
- Confidentiality. As your Will passes through probate, it becomes part of the public record. In most jurisdictions, almost anyone can view your Will. However, the terms of a trust usually remains confidential.
Find Out if a Trust Is Right for You.
Whether you need a trust or not depends on your particular circumstances. The attorneys at Miller Estate and Elder Law know how to help you with estate planning and probate. For a free consultation, contact us at 256-472-1900. Miller Estate and Elder Law is now located at 818 Leighton Avenue in Anniston, but we serve clients in Gadsden, Hoover, Talladega, Vestavia Hills, and surrounding areas.
Also, visit our website to learn more about our free workshops and guides.
by Bill Miller | Oct 24, 2018 | trust
Trusts come in different forms. Some are irrevocable, some are revocable. Some trusts transfer wealth from generation to generation, while others focus on probate avoidance. One of the most popular trusts is the revocable trust. It’s popular because of the advantages it offers. Like anything, though, revocable trusts have a few disadvantages also.
Revocable Trusts: The Basics
Like all trusts, a revocable trust is established and funded by someone referred to as a grantor or settlor. A trust documents sets out the details of the trust. The trust is funded by the grantor, then managed by the trustee. At least one beneficiary reaps a benefit from the trust.
Unlike irrevocable trusts, revocable trusts are fairly easy to change.
And Some Disadvantages
People seeking to add a revocable trust to their estate plan also must consider some of the disadvantages, including:
- Front-End Expense. Creating a trust typically is more expensive than writing a Will. However, using a trust-based estate plan usually saves money because the trust assets transfer to heirs without going through probate.
- Fewer Tax Advantages. Other trusts and financial plans are more likely to lower the grantor’s tax bill than a revocable trust.
- No Asset Protection. Since the grantor still controls the trust assets, they remain vulnerable to the grantor’s creditors and to civil judgments. An irrevocable trust may be a better option is asset protection is a concern.
Generally, the grantor of a revocable trust should frequently review his or her estate plan. Changes to laws, family circumstances, or finances could lead to altering, replacing, or eliminating the trust.
For example, Gary and his wife, Elaine, prepared an estate plan several years ago. At the time, they chose to go with a Will-based plan. However, their attorney recently suggested they set up a revocable living trust specifically to avoid probate. As they considered the pros and cons of revocable trusts, they realized that at this time a revocable trust was a great option for them.
Trusts are Complex
Schedule a consultation with one of the attorneys at Miller Estate and Elder Law Find out whether a revocable trust will work for you. Our phone number is 256-251-2137, or you may want to use the Contact Form on our website. We have offices in Anniston and assist clients in communities like Hoover, Vestavia Hills, Irondale, and Calera.
by Bill Miller | Aug 17, 2018 | Estate Planning, Special Needs, trust
Julia’s daughter, Jenna, is a happy 17-year old woman. She participates in social activities, attends school, and has a job despite being born with multiple birth defects. While she’s satisfied with the progress Jenna has made, Julie is worried about her future. She wonders if her daughter’s needs can be anticipated and provided for in her estate planning.
The Basics
Typically, an estate plan consists of a Will, a durable power of attorney, and an advanced health care directive like a health care power of attorney. But complete estate plans address all of the testator’s needs and some people need more than the basics.
Julia can provide for Jenna in her Will. She could also have Jenna’s inheritance transferred to a trust for her benefit.
Extra Protection
Parents of a disabled child may have options that ensure their child’s future support.
- Special Needs Trust. This type of trust may calm at least some of Julia’s fears. The trust would be funded with money and assets that a trustee could use for Jenna’s support. However, if the trust is not properly drafted, it could reduce or eliminate Jenna’s eligibility for public benefits like Medicaid.
- Medicaid Income Trust. Also known as a Miller Trust or a Qualified Income Trust, Jenna can transfer some of her monthly income to this trust to remain below Medicaid’s income limits.
- ABLE Account. Julia might consider setting up savings plan called an ABLE account. ABLE stands for Achieving a Better Life Experience. Anyone can contribute to Jenna’s account, and the funds will be used for Jenna’s support.
- Guardianship. Jenna will be considered an adult at age 18, even though she has the mental age of a 10-year old child. If she has not already done so, Julia should talk to an attorney about setting up a guardianship for Jenna. Although disabled people often need to be as independent as possible, they remain vulnerable to people who may take advantage of them.
It can be difficult to find a way to provide for a disabled child’s future while preserving eligibility for public benefits and their own independence.
Consult with an Alabama Estate Planning Attorney.
Another thing Julia could do? Provide a letter of intent for future caregivers that gives instructions for Jenna’s care. While not technically an estate planning document, Julia can keep this letter with her important papers.
The attorneys at Adams & Miller have the experience you need to get the estate plan you and your loved ones deserve. Contact Adams & Miller, P.C. at 256-251-2137 to schedule an appointment or fill out our convenient Contact Form. We help clients in Anniston, Talladega, Birmingham, Gadsden and surrounding communities.
