I had a new client come to my office recently. She was looking for Medicaid planning advice for her husband's parents. (This is a very frequent occurrence.) Her mother-in-law was suffering from dementia but was still able to live at home. Her father-in-law was 85 years old but in good health and led a fairly active life.
She told me that about 7 years ago, her in-laws had wills, a living will, and a revocable living trust drafted. She said her parents' total assets were worth about five hundred thousand dollars, and the revocable trust was drafted solely to avoid probate. I was dumfounded that the attorney who drafted the plan did not draft a durable financial power of attorney nor discuss Medicaid planning with the couple. After all, the husband was already 78 years old!
I explained that Medicaid had a five-year look-back period on transfers of assets for less than fair market value. I suggested that her in-laws might want to have a new irrevocable trust drafted. We also discussed the possibility of an irrevocable grantor trust, a special type of irrevocable trust that causes income to the trust to be taxed to the individual's personal return, rather than taxed at the higher trust rates.
In any discussion of an estate plan, it is important to discuss the roles of the various actors, such as executor, trustee, beneficiary, remainder beneficiary, and agent (also known as attorney-in-fact).
There are too many couples (and singles, as well) who get drawn to programs advertised to help avoid probate. If you are attracted to a program of this kind, you need to make sure that the presenter is able to addresses Medicaid planning. You also need to be sure that any attorney you see to help you with estate planning does so. If not, you're in the wrong place. If you're in the wrong place, contact me. I'd be happy to provide these services to you!
Your Cincinnati Elder Law Attorney
Paul A. Nidich
http://paulnidich.webs.com
