EstIf you are in the process of creating your estate plan, you may be wondering if a revocable living trust can help protect your assets from nursing home costs. This is a common concern for many Washington residents since the cost of long-term care can become quite extensive, potentially draining all of your financial resources. The good news is that with the right long-term care plan, you can prepare for these expenses ahead of time.
In this article, we will discuss what a revocable living trust is in Washington and whether or not it is a good option for protecting assets from nursing home costs. That being said, it’s always a good idea to consult with a Spokane estate planning lawyer one-on-one to discuss what legal options are the best fit for your unique situation.
What Is a Revocable Living Trust?
First, before we discuss the different tools you can use to protect assets from nursing home costs, what is a revocable living trust in Washington? This is a legal document that outlines your last wishes regarding how you want your assets treated at the time of your death.
A trustee is named in the trust, which will grant this individual the ability to manage the trust on your behalf. The trust should also name beneficiaries who will receive these assets.
Understanding what revocable living trusts do can be confusing since this is often confused with irrevocable trusts. So, here is a breakdown of the differences between a revocable trust vs an irrevocable trust:
- Revocable trust: A revocable trust allows you to remain as the owner so that you can make changes to the trust at any time.
- Irrevocable trust: The main purpose of an irrevocable trust is the same as a revocable trust but there is one big difference. Unlike a revocable trust, this trust removes your ownership of your assets and cannot be easily changed.
Can a Revocable Living Trust Protect Assets?
Unfortunately, you cannot use a revocable living trust to protect assets from nursing home expenses. This is because a revocable living trust still allows you to maintain ownership and control of your assets within the trust. And because you maintain ownership, this means that these assets are still considered to be part of your estate.
Because of this, a revocable living trust isn’t a good solution for protecting your assets from long-term care expenses or from Medicaid’s eligibility rules.
Alternative Asset Protection Strategies
Even though you cannot use a revocable living trust to protect your assets, there are plenty of other options available. Here are some examples of other asset protection strategies you can use to better prepare for future long-term care costs:
- Irrevocable living trusts: Instead of using a revocable trust, you can establish an irrevocable trust, which removes the assets from your control. This allows you to establish beneficiaries and legally remove these assets from your estate so that Medicaid doesn’t consider them to be countable assets.
- Gifting assets: If you are careful, you can also protect your assets by gifting them to your loved ones. However, to ensure you do this without violating Medicaid’s rules, you must gift your assets at least five years before you apply for Medicaid to avoid violating the look-back periods.
- Knowledgeable planning: One of the best ways to protect as many of your assets as possible is to understand all of Medicaid’s rules and benefits. For instance, your spouse may be able to keep a large portion of the assets if they aren’t applying for Medicaid. You also may be able to keep certain assets, including your home and vehicle, as Medicaid may consider these to be exempt.
Overall, the best way to protect your assets from the cost of long-term care is to get the help of a knowledgeable Medicaid planning attorney in Spokane, Washington. An attorney will better understand what your options are and can help you create an estate plan that protects your assets and gives you peace of mind.
Why Early Planning Matters
Long-term care planning isn’t just for the ill or the elderly; this is something that all Washington residents should do as soon as possible. It’s essential that you are proactive and create a plan before a health crisis arises. You also need to plan for any possible changes that could happen in the future, such as changes to your health that could result in you needing to live in a nursing home.
Early planning allows you to establish a plan while you have the ability to approve and outline your last wishes. Not only does this give you greater control of the future and peace of mind, but it also takes the weight off of your loved ones.
FAQ Section
Does a revocable living trust protect assets from Medicaid in Washington?
Because a revocable living trust allows you to maintain control of your assets, it will not protect assets from Medicaid.
What is the difference between a revocable and an irrevocable trust?
Both trusts operate in a very similar way, except that a revocable trust allows you to maintain control of your assets and an irrevocable trust doesn’t. This means that a revocable trust is more flexible and can be changed, but it will not protect assets from nursing home expenses or Medicaid’s eligibility rules.
Can I still control assets in an irrevocable trust?
Because you no longer control the assets in an irrevocable trust, these trusts usually cannot be changed in any way.
Will a trust help my family avoid probate?
Yes, if carefully created, a trust can help your family avoid probate by protecting assets and establishing beneficiaries.
Start Preparing For Future Nursing Home Costs With the Help of an Elder Law Attorney
All Washington residents need to prepare for the future by having a thorough long-term care plan that protects their assets from things like nursing home costs. To learn more about long-term care planning, reach out to Kristina Mattson Law today at 509-998-6629 to speak with an experienced and knowledgeable elder law attorney in Spokane, Washington.
