An Asset Preservation Trust is a special trust we use in Asset Preservation Planning to protect assets that could be lost to the financially devastating costs of long-term care.
Basically, how it works is that ownership of the assets transferred into the trust is no longer considered yours, therefore the assets are protected from any long-term care costs that you may incur. For the government to recognize this to be true, whether it’s Medicaid or the VA, the trust must contain three important things.
In this Elder Law Minute, Wes Coulson, Southern Illinois Elder Law attorney, continues with the series on Asset Preservation Planning and explains how an Asset Preservation Trust protects your life savings from long-term care costs.
How An Asset Preservation Trust Protects Your Life Savings From Long-Term Care Costs
Hi, I’m Wes Coulson and this is your Elder Law Minute. Today I want to talk about how it is that an Asset Preservation Trust protects your life savings from long-term care costs. The reason that’s the case is that if the trust is set up the right way, ownership of the assets that you transfer into the trust is no longer considered yours. The government, whether it’s Medicaid or VA, is basically looking for three things for that to be true. I’ll give them to you in plain english and translate into legalese.
First, it has to be a done deal. You can’t change your mind a couple of years later and say, “Cancel it, give me the assets back.” So in trust’s terms, it has to be irrevocable.
Second, if you think of the trust as a safe, somebody other than you has to have the key to the safe. The person with the key to the safe, in case of the trust, is the trustee. So, you get to choose the trustee, but it can’t be you.
The third thing is that the trust can’t provide for any money to be distributed out directly back to you or to pay your bills. But, that doesn’t mean that it can’t get there. I like to use the baseball analogy, that whereas a runner can’t run straight across the infield from second base to home plate, he can certainly get there by going second to third and then third to home. Second base, the trust; third base, a family member to whom you’ve authorized distributions; and then home plate, them getting the money back to you. Thanks.
For more information on Asset Preservation Planning, visit these articles:
- Why do I need an Asset Preservation Plan?
- What if I put my life savings into an Asset Preservation Trust and then I need some back later?
- Long Term Care Costs: The Biggest Threat to your Financial Future
“Your Trusted Advisor on the Elder Care Journey”
Coulson Elder Law is dedicated to providing families in the St. Louis area with their Elder Law needs. Our practice areas include Asset Preservation Planning, Veterans Benefits, Medicaid Eligibility, Alzheimer’s Planning, Special Needs Planning, Estate Planning and more. We understand the financial challenges you may face as you and your loved ones grow older. At Coulson Elder Law, our clients’ well-being is our number one priority. For immediate help, call (877)995-6876 or Contact Us and we will get in touch as soon as possible.