When you use a will to state your wishes regarding the transfer of your property, the heirs don’t receive their inheritances until the estate has been probated. A revocable living trust is a type of trust that is largely utilized to facilitate the transfer of assets to the beneficiaries without a probate proceeding.
Probate is a legal process that takes place under the supervision of a court. The will must be admitted to probate by the executor or personal representative. The executor is the person that will administer the estate, which is done under the supervision of the probate court.
The reason some people use revocable living trusts to avoid probate is because probate comes with certain drawbacks. As mentioned above, the heirs don’t receive their inheritances until the process of probate has run its course. Regardless of whether the heirs need the money or not, no one wants to wait forever for an inheritance.
Probate can be time-consuming, taking anywhere from 4 months to 13 months or longer in Ohio, depending on the complexity of the case.
There are also a number of costs that are incurred during the probate process, which can make it extremely expensive.
Now that you know the purpose of revocable living trusts, we can explain the utilization of trusts for Medicaid planning.
Many people rely on Medicaid later in their lives for long-term care costs that are not covered by Medicare. Medicaid is intended for people with limited financial resources. As a result, people often try to rid themselves of property in advance of applying for Medicaid.
One way that you could accomplish this would be to convey assets into a trust. When people create trusts for this purpose, they are often referred to as Medicaid trusts.
A revocable living trust would not be useful for Medicaid planning purposes, because it is in fact revocable. You as the grantor of the trust have the right to rescind the trust agreement and handle the resources that have been conveyed into the trust as you see fit. Short of revoking the trust, you can also amend the trust. You can also act as both the trustee and the beneficiary while you are alive. In short, you do not surrender control of the assets, and you retain incidents of ownership. Therefore, the trust’s assets would be looked upon as your own countable property by Medicaid and if the assets are more than you are allowed to keep while on Medicaid then you will be denied.
In addition to revocable trusts there are also irrevocable trusts. Irrevocable trusts can be used for Medicaid planning purposes. Assets conveyed into this type of trust would not be counted as personal property by the Medicaid program, under the right circumstances.
Working with a qualified Medicaid lawyer is the best way to understand if and how an irrevocable Medicaid trust can be helpful to you. A full explanation is beyond what a blog can cover. But if you’d like to learn more about Medicaid planning so you can be better informed when you consult a lawyer, download our free special reports on the topic. Visit our website and choose among the several reports focusing on Medicaid and nursing care. www.zimmerlawfirm.com.
For more information on Medicaid planning and a consultation, contact the Zimmer Law Firm today at 513.721.1513.