October 27, 2015
As part of estate planningPlanning in advance of disability, incapacity, or death to make sure that key life issues have been addressed while the person is still of sound mind and able to understand and sign key documents such as Power of Attorneys, Power of Attorneys for Health Care, Wills, and Trusts to form a strategy and provide for the administration and disposition of his or her assets upon death or upon incapacity. consultations with our clients, we consider Irrevocable Trusts a primary tool to protect homes, real estate and other assets from nursing homes or other long term care costs. This powerful estate planningPlanning in advance of disability, incapacity, or death to make sure that key life issues have been addressed while the person is still of sound mind and able to understand and sign key documents such as Power of Attorneys, Power of Attorneys for Health Care, Wills, and Trusts to form a strategy and provide for the administration and disposition of his or her assets upon death or upon incapacity. tool is an increasingly important and powerful mechanism to ensure our clients’ wealth is managed in keeping with their wishes.
Protecting Homes and Assets: A Sea of Confusion
Following the many changes to the new Wisconsin Budget Bill, there has been much confusion about how best to protect one’s assets, particularly in the event of needing long term care.Even among attorneys there is often a lot of confusion about the best ways to protect assets from long term care costs.
Stop Nursing Homes From Taking Your Assets
With proper advanced planning, you can protect your assets from nursing homes.
At Wokwicz Law Offices, we have been utilizing Irrevocable Trusts to protect clients’ assets from long term care costs since the 1990’s. We have been drafting and implementing these Irrevocable trusts long before other attorneys understood why or how to properly set them up for nursing home protection.
The traditional tools of the skilled estate planningPlanning in advance of disability, incapacity, or death to make sure that key life issues have been addressed while the person is still of sound mind and able to understand and sign key documents such as Power of Attorneys, Power of Attorneys for Health Care, Wills, and Trusts to form a strategy and provide for the administration and disposition of his or her assets upon death or upon incapacity. lawyer – Last Wills and Testaments, Powers of Attorney, Life Estates and Revocable Trusts – do not pack the same power of protection that an Irrevocable TrustA trust that cannot be terminated, revoked or amended by the creating person. In Wisconsin and in estate planning an irrevocable trust can refer to a trust that is set up to protect assets from a nursing home and Medical Assistance if prepared and funded well in advance. See Using Trusts to Protect Assets from Nursing Homes can. We make sure that our clients understand that a Revocable TrustA trust created during lifetime that can be terminated, amended, or modified by the person creating it. A Revocable Trust is often used in Wisconsin to avoid probate and provide for the orderly and proper distribution of assets upon death of its creator and to provide for management of assets and property if the creator of the trust becomes incapacitated. and most other “living” trusts do not protect assets from nursing homes or other long term care costs. We explain to our clients that Irrevocable Trusts are generally the best option for those who desire to protect their homes for the next generation.
The Decline of the Life Estate to Protect Your Home
In August of 2014, Wisconsin implemented new “estate recovery” laws allowing for the collection of nursing home costs for long term care from individuals who owned real estate and homes while reserving a life estate. Real estate and homes that established life estates prior to August of 2014 were grandfathered, but for those who were unaware and created a life estate after August of 2014, their home or other real estate willA written document that sets forth and names the personal representative who will be in charge of overseeing the probate process and names the specific bequest and residual beneficiaries of property who are to receive and inherit assets and property through probate. A Will does not avoid probate, and must be properly drafted and executed to be legal. A Will can also avoid the use of a surety bond in many instances and can help utilize an “informal” Wisconsin probate process if it has the proper clauses and attestation clause. not be fully protected from “estate recovery.”
Therefore, as of August of 2014, we have discouraged our clients from implementing life estates to protect their homes and other real estate from long term care costs. Instead, we counsel our clients to establish Irrevocable Trusts or Income Only Irrevocable Trusts to protect their homes and other property from long term nursing home costs. This type of trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. must be specially drafted in order to protect your home from long term care nursing home costs.
The Irrevocable Trust Must Be Strategically Drafted
In order to achieve the desired asset protection from nursing home and other long term care costs, the must be specially drafted by a knowledgeable attorney who understands the unique laws that apply to nursing home trusts.
The Irrevocable and Irrevocable Income Only TrustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. is not a simple trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. to draft, even for attorneys. To work properly takes an understanding of property law, tax law, estate planningPlanning in advance of disability, incapacity, or death to make sure that key life issues have been addressed while the person is still of sound mind and able to understand and sign key documents such as Power of Attorneys, Power of Attorneys for Health Care, Wills, and Trusts to form a strategy and provide for the administration and disposition of his or her assets upon death or upon incapacity. laws, Medicaid law and trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. law.
We understand these laws and have implemented Irrevocable TrustA trust that cannot be terminated, revoked or amended by the creating person. In Wisconsin and in estate planning an irrevocable trust can refer to a trust that is set up to protect assets from a nursing home and Medical Assistance if prepared and funded well in advance. See Using Trusts to Protect Assets from Nursing Homes for protecting assets from nursing homes for decades. It has been one of the tools that we rely upon to accomplish our clients’ goals. It is crucial that your attorney is experienced in the proper implementation of Irrevocable Trusts and that he or she understand the law when setting up this complex and involved trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries..
You do not want to find out that your attorney set up your trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. incorrectly after it is too late. Unfortunately, we have had the unpleasant task of informing well over a dozen clients in recent years that their previous attorney did not set up their irrevocable trustA trust that cannot be terminated, revoked or amended by the creating person. In Wisconsin and in estate planning an irrevocable trust can refer to a trust that is set up to protect assets from a nursing home and Medical Assistance if prepared and funded well in advance. See Using Trusts to Protect Assets from Nursing Homes properly and that their home was not protected from the very nursing home costs the trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. was established to avoid. Sadly for many of these people, it was too late to undo the harm or to set up a new, properly-drafted Irrevocable TrustA trust that cannot be terminated, revoked or amended by the creating person. In Wisconsin and in estate planning an irrevocable trust can refer to a trust that is set up to protect assets from a nursing home and Medical Assistance if prepared and funded well in advance. See Using Trusts to Protect Assets from Nursing Homes.
Timing is Very Important
To work properly, an Irrevocable TrustA trust that cannot be terminated, revoked or amended by the creating person. In Wisconsin and in estate planning an irrevocable trust can refer to a trust that is set up to protect assets from a nursing home and Medical Assistance if prepared and funded well in advance. See Using Trusts to Protect Assets from Nursing Homes should be set up well in advance of the need for long term care or nursing home care. Setting up an Irrevocable TrustA trust that cannot be terminated, revoked or amended by the creating person. In Wisconsin and in estate planning an irrevocable trust can refer to a trust that is set up to protect assets from a nursing home and Medical Assistance if prepared and funded well in advance. See Using Trusts to Protect Assets from Nursing Homes at least five years in advance of any such need is ideal. Therefore, the time to set up a trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. to protect your house or other property is well in advance of needing to enter a nursing home or assisted living. It should be set up while you are still healthy.
Transferring Your House Directly to Your Children
When talking with clients about Irrevocable Trusts, we are often asked about transferring a house or property directly to the client’s children.
Transferring your house directly to your children is normally not the best way to protect your house from a nursing home. That approach involves substantial risks since your children then own your house, and any divorce or financial or family dispute between your children and other’s can put your house at risk.
A trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. can substantially reduce these risks. A trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. can allow for reduced taxes following your death and even if the house is sold during your lifetime, versus an outright gift to your children.
Answering Your Irrevocable Trusts Questions
If you have questions about the value of Irrevocable Trusts as part of your estate plan, you are invited to get in touch. Our estate planning attorneys would be happy to schedule an appointment to answer your questions. Please contact us on 262-658-2181 or info@wokwicz.com.