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By Nancy J. Brady, RN, Esq., Partner Brady & Marshak, LLP, Attorneys at Law

At Brady & Marshak, LLP, our practice if focused on the legal issues of “middle class” New York residents. Many of our clients are homeowners and have reasons to protect the value of their home, which is often their most valuable asset.  As middle class homeowners, we have all struggled to build equity in our homes– whether we are first time homeowners just starting out, or homeowners who have finally paid off the mortgages, lived in the home for many years.  We all want to prevent our home’s value being lost to the costs of probate, or from long term care costs (home care and/or care in a facility) due to prolonged illness.

The best proven plan to protect the value of the home from the cost and delays associated with probate is a Revocable Living Trust. This type of trust is a private agreement and is a means by which challenges to a Will can be avoided without will contests and litigation.  Irrevocable Trust planning, in addition to the purpose of avoiding probate, will have the added benefit of protecting the value of all of the assets (financial and real property) form the costs of future long term care.

It’s important enough to state it again. Irrevocable trust planning, avoids probate (like the Revocable trust), AND protects the value of the asset of the property (real property or financial) from having to be lost to the cost of care.

Much of the language in the irrevocable trust is necessitated by the Medicaid regulations. Some key language will be drafted to meet your particular goals.  Once the ownership or title on your assets has been transferred to your trust, it will take five years, or sixty months before the assets and property are fully protected from the expense of nursing home care.

Frequently asked Questions:  

Why not just transfer the deed or my assets to my children to “get them out of my name”?

Any assets transferred to another person, or held jointly with another person, will be at risk if that person has financial problems. If you transfer the deed to your home to your children, there could be capital gains tax consequences.  If your child predeceases you, your home could then belong to your son’s spouse.  If your child is owner of your bank account, if he/she is involved in a lawsuit, bankruptcy or divorce, your asset will be jeopardized.  Assets and property transferred to a trust are recorded using the Tax Identification Number, rather than any person’s social security number.

What if I need nursing home care before 5 years has passed since I funded the trust?

In NY state the law tells us that the trust can be broken if all parties named in the trust agree. We have done this many times in our office.  Once the trust is properly revoked, if the individual is in a nursing home, with further legal planning, approximately half value of the assets can be protected.

If I put my savings in the trust, will have to go to my children (trustees) every time I need money?

Absolutely, positively, “NO!” When it comes to transferring assets to the trust, the attorney will advise, based on your particular circumstances, and what feels comfortable to you.  The income, or interest earned by the assets held in the trust will continue to be part of your income.  You, with the advice of the attorney will decide how much you feel comfortable putting into the trust, and how much you would like to keep outside of the trust for easier access should you need liquidity for emergency or personal spending.

Can liquid assets, like my savings be transferred into the trust as well as real property?

Yes, the financial assets will need to be titled to the trust, using the tax identification number and will be protected in the same manner as real property, from the date of transfer of the asset.

In conclusion, if you live in New York, and have assets and property that you would like to preserve for your family to inherit, rather than losing these assets to the costs associated with medical care, you MUST do advance planning. You owe it to yourselves and your family to make informed decisions in these matters, by consulting with attorneys experienced in these matters.  Brady & Marshak, LLP, can be reached at 1-718-738-8500.