Irrevocable Trusts
Irrevocable trusts are a crucial element in many estate plans, particularly if long-term care is a consideration for you or your loved ones. However, creating an irrevocable trust involves numerous considerations, including the Medicaid Five-Year Lookback period, which examines asset transfers made within the five years before applying for Long-Term Care Medicaid (nursing-home Medicaid).
At Darpel Elder Law, our experienced estate planning and Medicaid planning attorneys will meticulously assess your specific needs and preferences. We will provide a comprehensive outline of your best options, including the potential creation of an irrevocable trust while ensuring compliance with Medicaid's Five-Year Lookback period and other relevant factors.
To schedule a consultation, contact us online or call (859) 341-4100 today.
Understanding Irrevocable Trusts in Northern Kentucky
An irrevocable trust is a trust that cannot be changed, amended, or terminated after it is created (with some limited exceptions). By creating an irrevocable trust, the grantor relinquishes their control over those assets placed in the trust. Not all assets need or should go into the trust. Irrevocable trusts are administered by a trustee to benefit the trust beneficiaries.
Pros of an Irrevocable Trust in Kentucky
There are various reasons a grantor may choose to place assets in an irrevocable trust, including:
Asset Protection
Irrevocable trusts provide protection to the assets that they contain. This includes protection from Medicaid, creditors, judgments, and divorce. People employed in highly litigious professions are most likely to use irrevocable trusts for this purpose. Irrevocable trusts are frequently used in Medicaid or Long-Term Care Planning. By transferring assets into an irrevocable trust, you could start the Medicaid Five-Year Lookback period for those assets.
Beneficiary Protection
Irrevocable trusts are a useful estate planning tool when you are providing for a family member with special needs. These trusts are often referred to as irrevocable special needs trusts, and they allow a beneficiary with a disability to receive funds for their living expenses without that income being used to disqualify them from receiving government benefits.
Cons of an Irrevocable Trust in Kentucky
There are various reasons a grantor may choose against placing assets in an irrevocable trust, including:
Loss of Control
If you desire to maintain control over your assets, an irrevocable trust may not be the best choice for you. Changing the terms of an irrevocable trust is something that is not easily accomplished after it has been formed unless all parties (trustee and beneficiaries) are on board.
Unforeseen Circumstances
While the formation of an irrevocable trust may seem like a good idea when it is established, circumstances change, and it may not be the best choice down the road. Even so, you will not be able to easily change the terms to fit your new situation.
Terminating an Irrevocable Trust Kentucky
In limited circumstances and jurisdictions, it may be possible to terminate an irrevocable trust by agreement when all parties, including the trustee and the qualified beneficiaries, agree to do so. Modification or termination of an irrevocable trust may also occur pursuant to a judge's order. Judges are more inclined to make these changes or terminate an irrevocable trust when it is obvious that the purpose of the trust has been fulfilled, has become illegal, or is defeated by compliance with the terms of the trust.
Otherwise, irrevocable trusts will end naturally pursuant to the terms that were established when the trust was created. It is typically dependent upon an event, such as the death of the person who created the trust, or it will end on a certain date.
Contact an Irrevocable Trust Lawyer in Northern Kentucky Today
We at Darpel Elder Law want to help you make the best choices for yourself and your family. There is a lot to consider with any estate planning or Medicaid planning case. To get started on your estate plan, contact our estate planning lawyer today by either using our online form or calling us directly at (859) 341-4100. We will help you with trusts, wills, powers of attorney, and other estate planning documents that suit your specific needs.