Frequently Asked Questions about Estate Planning, Special Needs Planning, Minnesota Business Law, and Asset Protection Services

Revocable vs. Irrevocable Trusts: What’s the Difference?

When creating an estate plan, one of the biggest decisions you might encounter is whether to use a revocable or irrevocable trust. What is the difference between the two and when is one more appropriate than the other?

Revocable and irrevocable trusts are two common estate planning tools, but they have some key differences. A revocable trust offers flexibility since you can modify it at any time. An irrevocable trust can provide tax advantages and asset protection since its terms can’t be changed once it’s set up. There are pros and cons to each type of trust. To discuss your estate plans in Florida or Minnesota, consider contacting an experienced estate planning attorney at Roulet Law Firm, P.A., by calling our Venice, Florida office at (941) 909-4644 or our Minnetonka, Minnesota office at (763) 420-5087 to schedule a consultation.

Flexibility and Control with Revocable Trusts

As the name suggests, revocable trusts can be revoked, amended and changed by you throughout your lifetime. Given their flexible nature, revocable trusts are easy to update as your life circumstances evolve — be it marriage, a new child, or even sudden financial changes.

Revocable Trusts Can Avoid Probate

One of the main benefits of a revocable trust is that it avoids probate, the court-supervised process for distributing assets after someone dies. With a revocable trust, your designated successor trustees can step in to manage assets according to your wishes without court oversight. That means your family not only saves the time and expense of court involvement, but they also have much quicker access to your assets in the event something were to happen to you as they do not have to wait on the court.

Revocable Trusts Keep Your Affairs Private

Revocable trusts also provide privacy, since the trust terms and asset distribution details don’t become public record through probate. This helps protect your family from prying eyes and third-parties who may be looking to “help them spend their inheritance”.

Tax Savings and Asset Protection with Irrevocable Trusts

As the name suggests, irrevocable trusts generally cannot be changed by you after they are created. So you may be wondering why you would want to lock yourself into an irrevocable trust. Well, there are numerous advantages.

Tax Savings Using an Irrevocable Trust

While irrevocable trusts generally don’t allow modifications, they can provide estate tax planning advantages. Assets transferred to a properly structured irrevocable trust may be removed from your taxable estate helping you to minimize, or even avoid, state and/or federal estate taxes at your passing.

Creditor Protection

Assets placed in an irrevocable trust are shielded from creditor claims and lawsuits. Therefore, using the right type of irrevocable trust can provide robust asset protection for you from potential creditors.

Protecting Assets for a Surviving Spouse

There are many reasons why you may not want to leave assets outright to your surviving spouse. For example, your spouse could remarry and have the assets end up being left to their new spouse and family. Your spouse could get sued. By leaving assets in an irrevocable trust for the benefit of your surviving spouse, you can provide for them, while ensuring the assets you leave behind are protected.

Planning for a Vacation Home or Heirloom Property

Irrevocable trusts are commonly used to hold heirlooms intended for particular beneficiaries. If you own a lake home, cabin, family farm, beach house or other heirloom property, an irrevocable trust may be the right choice for you. By placing the property into a properly prepared trust, you can ensure the property passes only to people you intend.

This can be especially useful if you inherited the property. For example, I often ask clients how they would feel if the farm or lake home they inherited from their parents or grandparents ended up going to someone outside their immediate family as a result of a divorce or other event. Proper planning can ensure that does not happen.

Protecting Your Home and Retirement Nest Egg from Nursing Home and Long-Term Care Costs

Revocable trusts do not protect your home and savings from long-term care and nursing home costs. However, a family asset protection trust, a special type of irrevocable trust can also be used to protect your assets from these expenses.

So when should you choose each type of trust.

Consider revocable trusts if:

• You want to retain flexibility and control over assets. Their modifiable nature allows changes to be made more easily as your circumstances change
• Your main goal is to avoid probate

Consider irrevocable trusts if:

• Your top priority is minimizing estate taxes
• You want robust asset protection from lawsuits
• You intend to provide for a surviving spouse but want to limit control
• You want to protect your assets from long-term care and nursing home costs
• You want to protect special assets like heirlooms or a vacation property

Many Clients Will Use Both

For many clients, their planning goals will be such that they end up having more than one trust. For example, if you own an heirloom property, you may set up an irrevocable trust that owns that property while using a revocable trust to hold the balance of your assets in order to avoid probate. Many of our clients will set up a family asset protection trust to protect their home and savings from long-term care and nursing home costs while owning the balance of their assets in a revocable trust to help avoid probate.

The optimal trust vehicle depends on your unique situation and priorities. Meet with an experienced estate and elder law planning attorney to decide if a revocable or irrevocable trust is the right strategy for you. With proper set up tailored to your needs and goals, the ideal trusts can provide you key benefits like tax savings or probate avoidance. Reach out to us today by calling our Florida office at (941) 909-4644 or our Minnesota office at (763) 420-5087 or fill out the contact from on this page to examine how trusts and customized planning can be used to create an effective estate plan for you.

And if you are not yet ready to get started on your own plan, or to update your existing one, and would like additional information we have two additional resources for you.

 

If you would like to learn how to make it as easy and inexpensive as possible for your family to manage your affairs during incapacity and after passing, while ensuring your assets only go to whom you want and how you want, click here to register for our FREE online masterclass.

And, if you would like to learn how to protect your home and life savings from long-term care and nursing home costs, click here to download our FREE guide Save our Home: How to Protect Your Home and Life Savings From Long-Term Care and Nursing Home Costs.

 

Planning Options to Protect Your Home and Savings from Medicaid Estate Recovery in Minnesota and Florida

Medicaid provides a vital safety net to help cover long-term care costs for seniors. However, after you pass away, Medicaid will seek to recover for benefits paid on your behalf by placing a claim or lien against your estate, including your home.

In this article, I’ll explain how Medicaid estate recovery works. More importantly, I’ll share strategies that can help shelter your home and savings from liens and forced sale to repay Medicaid. With proper planning, you may be able to protect your home and retirement nest egg.

Odds Are, You and Your Spouse Will Need Care

According to government statistics, approximately 72% of people over age 65 will need some form of long-term care. Care includes home health aides, assisted living and even skilled nursing home care. The average length of care for a man is 2.2 years and the average length of care for a woman is 3.7 years.

Long-Term Care Costs are Skyrocketing. In 2021, the national average cost of a nursing home was over $100,000 a year. In Minnesota, it was over $140,000 a year. On the gulf coast of Florida, the average annual costs were over $120,000 a year. And costs are rising faster than inflation.

Government Benefits for the Middle Class

With costs potentially exceeding over $1 million for the average married couple, government benefits are now the #1 way middle class families are covering these costs. Specifically, a government program known as Medicaid, or also sometimes referred to as Medical Assistance.

Understanding Medicaid Estate Recovery in Minnesota and Florida

To qualify for long-term care Medicaid in Minnesota, your assets must be below $3,000. In Florida, they must be below $2,000. If you are married, your spouse must also spend down prior to qualifying to receive benefits. Medicaid will then help pay for care in a facility or at home.

However, after your passing, federal law says the state must seek recovery of Medicaid benefits paid from your estate. This means any property you owned at death, including your home, may be subject to liens and even forced sale to repay Medicaid.

The state has the right to recover Medicaid costs before any other heirs inherit or creditors are paid. Medicaid recovery comes first after you pass away.

Take Steps Now to Protect Your Family Later

To reduce assets potentially subject to future Medicaid estate recovery, planning strategies can be implemented now to shield resources. One option to consider:

Family Asset Protection Trust – Assets can be transferred into a Family Asset Protection Trust. This a specific type of trust that is set up under federal and state law. When done correctly, it can protect the assets you put into it, such as your home and savings, from long-term care and nursing home costs.

Get Personalized Planning Guidance for Your Situation

The intricacies of Medicaid eligibility, recovery programs, and allowable asset protection strategies can be challenging to navigate. Proper planning is essential to shelter your home and savings.

At Roulet Law Firm, P.A. we have extensive experience assisting Minnesota and Florida families protect their assets from long-term care costs through customized Medicaid and estate planning.

To explore options for sheltering your home and savings from Medicaid estate recovery, contact our Minnetonka, MN office at (763) 420-5087 or our Venice, FL office at (941) 909-4644 or fill out the contact form on this page and one of our team members will contact you.

If you are not yet ready to put a plan in place to protect your retirement nest egg, and need additional information before you schedule your meeting with us to start your plan, Click Here to download our FREE consumer guide "Save Our Home: How To Protect Your Home and Life Savings From Long-Term Care and Nursing Home Costs" which provides additional information. Don't leave it to chance and risk sacrificing your life's work.

Can The Government Take My Home if My Spouse or I Go Into A Nursing Home or Need Long-Term Care?

This may shock you, but the short answer is yes, it is possible you could lose your home if either you or your spouse go into a nursing home.

Find out how you can safeguard your most precious asset and secure your future.

As we reach our golden years, concerns about long-term care become increasingly relevant. One of the biggest worries for married couples is the potential loss of their home if either spouse needs to enter a nursing home. It's natural to wonder: Can the state really take away our beloved home?

Odds Are, You and Your Spouse Will Need Care

According to government statistics, approximately 72% of people over age 65 will need some form of long-term care. Care includes home health aides, assisted living and even skilled nursing home care. The average length of care for a man is 2.2 years and the average length of care for a woman is 3.7 years.

Long-Term Care Costs are Skyrocketing. In 2021, the national average monthly cost of a nursing home was over $8,000 a month. In Minnesota, it was averaging over $11,000 per month for a shared room and over $13,000 for a private room. On the gulf coast of Florida, the average costs were over $10,000 per month. And costs are rising faster than inflation.

Government Benefits for the Middle Class

With costs potentially exceeding over $1 million for the average married couple, government benefits is the #1 way middle class families are covering these costs. Specifically, a government program known as Medicaid, or also sometimes referred to as Medical Assistance.

Understanding Medicaid Eligibility

To determine whether the state can seize your home, it's crucial to understand Medicaid eligibility rules. The government wants you to spend almost all of your own assets first. Therefore, it has strict income and asset limits that need to be met before you can qualify for benefits.

Home Equity Limits

Both Minnesota and Florida have specific rules regarding home equity limits when it comes to Medicaid eligibility. These rules aim to prevent individuals from transferring their assets to qualify for Medicaid while still retaining substantial wealth.

If the equity in your home is over the equity limit, the excess equity needs to be used to pay for care. However, even if your home is under the equity limit, the government may still be able to take it. If you are single, need care, and are unable to return home, your home is now an available asset that the government can take to pay for your care.

If you are married and your spouse goes into a nursing home, your home is protected as long as you do not need care and it is under the equity limit. However, if you later need care and can’t return, then your home is an available asset. Even if you never require care, the government can place a lien on your property for benefits provided to your spouse. When you pass away and your home is sold, they can take the proceeds from your home. This is known as estate recovery.

Planning Ahead - Trusts and Estate Planning

To safeguard your home and assets further, it's essential to engage in proactive estate planning strategies. Federal law allows you to do planning ahead of time, which can protect your home and life savings from needing to be spent down prior to receiving benefits, and from the state taking your home and savings after your passing for benefits you or your spouse received.

Consult with an Elder Law Attorney

Navigating Medicaid rules and planning for long-term care can be complex. Consulting with an experienced elder law attorney who specializes in Minnesota or Florida laws is crucial. They can guide you through the intricacies of asset protection, help you understand the nuances specific to your state, and help ensure you make informed decisions that align with your goals.

By understanding the rules specific to your state, taking advantage of spousal protections, and engaging in proactive planning strategies, you can secure your most cherished asset and enjoy peace of mind during your golden years. Remember, knowledge is power – so take action today!

If you would like to schedule a consultation to discuss how you can protect your home and life savings from long-term care and nursing home costs, contact us today at our Minnetonka office at (763) 420-5087, or our Gulf Coast, Florida office at (941) 909-4644.

If you would like to learn more, click here to download our free guide "Save Our Home: How to Protect Your Home and Life Savings From Long-Term Care and Nursing Home Costs".