One of the most frustrating aspects of any form of advance planning is the inability to accurately predict the future. Oklahoma residents make every effort to create an estate plan that will suit a variety of potential outcomes, but there is always the risk of neglecting a critical area of need. An example is found in the area of residential medical care, and the rules governing the financial aspects of that care. For families who are concerned about the possibility of needing nursing home care, irrevocable trusts may offer a good fit.
When an individual has the need for residential nursing home or rehabilitative care, Medicaid is a great funding resource. However, in order to qualify for Medicaid coverage, an individual must use most of his or her own assets prior to that coverage becoming effective. This is known as "spending down" assets, and it is a scenario that many families strive to avoid. Having to sell off real estate or tap into investments in order to cover the cost of residential care can leave a family in dire financial straits. Without the proper level of planning, it can also completely destroy any inheritance that one's children or grandchildren might receive.
An irrevocable trust is a good way to protect assets from the spending down process that so many families face. By placing real estate and other valuable assets into such a trust, the family is no longer the legal owner of that property. The trust itself owns the assets held within, and the named beneficiaries will eventually inherit those assets. In the meanwhile, the individual or couple who are facing a residential care need will have reduced their estate significantly, bringing them that much closer to qualifying for Medicaid.
Irrevocable trusts are a good fit for many Oklahoma families, but the best estate plan is one that takes all potential life events into consideration. By working with a qualified estate planning attorney, it is possible to create a plan that is tailored to a family's needs. In addition, periodic reviews of the documents held within that plan can ensure that a proper level of asset protection remains in place as life events occur.
Source: greenbaypressgazette.com, "Review estate plan often to protect beneficiaries", Carissa Giebel, June 29, 2015