Difference between revocable and irrevocable trusts to protect assets from probate and nursing homes
Terry, is there a trust, revocable or irrevocable, that can protect the assets of one’s home from probate and long term nursing care? I know about a Transfer of Deed, but that won’t protect the asset of one’s home from being depleted due to healthcare long term. I am in the process of revising my Will and want to ensure some kind of trust to protect my home as best I can since that is the largest asset I can leave for my children. Appreciate any help you can give.
I always enjoy your segments on WGN morning news and I have seen you address trusts in the past. Thank you.
Terry Says
Well, you need to consult an estate planning attorney because you have some big misconceptions. Let’s start with probate. A simple revocable living trust keeps your assets from going through probate — IF they are re-titled in the name of the trust. Then your successor trustee simply distributes those assets according to your written instructions. Other assets such as IRAs and life insurance policies have beneficiaries designated on them — so they do not go through probate either. And if you hold property in joint tenancy, with rights of survivorship, the other tenant will get the property without it going through probate. Probate is the process of changing title to your assets. It requires an attorney, costs money, and is a public record of your assets. That’s why I always advise creating a REVOCABLE LIVING TRUST for estate purposes. You can always change or sell assets inside the trust. Consult an estate planning attorney.
Now ‘qualifying” for Medicaid nursing home is a completely different story. There are very specific limits as to assets and income to qualify for Medicaid in Illinois. A lot depends on whether you have a surviving spouse living in the home — or whether you have a son or daughter living there with you. And the state can “look back” five years to see if you transferred assets. Here is a link to the complete set of rules for Illinois Medicaid eligibility.
BUT I suggest you re-consi9der the idea of impoverishing yourself to qualify for Medicaid. Believe me, in Illinois, the last place you want to be is in a Medicaid nursing home. If you have assets enough to pay for at least the first two years of a nursing home, you will be far better off.
