Category Archives: Living Trust Plus
The Veteran’s Aid and Attendance Pension Benefit
The best advice that I can give you when planning for long-term care is not to delay. We never know what the future holds. While we are able, we must prepare for a variety of situations, and so it is imperative not just to plan for long-term care, but to plan properly.
Part 1 of this five part series began showing why establishing a good Long-Term Care Plan is a necessary and urgent matter. Part 2 outlined the three most essential documents found in a good Long-Term Care Plan and Part 3 explained how long-term care insurance might enhance that plan. The last installment, Part 4, discussed how a trust that is unique to our firm, the Living Trust PlusTM Asset Protection Trust, can protect your assets from the hassles and expenses of probate PLUS the expenses of long-term care. The Living Trust PlusTM is the only type of self-settled asset protection trust that allows a settlor to retain an interest in the trust while also protecting the assets from being counted according to state Medicaid laws. What I have just described is the single most prominent feature of the Living Trust PlusTM and it is also what makes this type of trust be the preferred form of asset protection for most people.
The final installment of this series will now discuss an under-utilized, special monthly pension benefit available to wartime veterans and surviving spouses of deceased wartime veterans who are incapable of self-support and in need of regular personal assistance.
Who Is Eligible for the Veteran’s Aid and Attendance Pension Benefit?
To receive the Veteran’s Special Pension Benefit for Aid & Attendance, a veteran must have served on active duty, at least 90 days, at least one day of which occurred during a period designated as wartime.
Periods Designated As Wartime:
- World War II — December 7, 1941 through December 31, 1946
- Korean Conflict — June 27, 1950 through January 31, 1955
- Vietnam Era — August 5, 1964 through May 7, 1975; for veterans who served “in country” before August 5, 1964, February 28, 1961 through May 7, 1975
- Gulf War — August 2, 1990 through a date to be set by law or Presidential Proclamation
There must have been a not dishonorable discharge. If younger than 65, the veteran must be totally disabled. If age 65 and older, there is no requirement to prove disability. However, the veteran or spouse must be in need of regular aid and attendance due to: inability of claimant to dress or undress, or to keep clean and presentable; frequent need of adjustment of any special prosthetic or orthopedic appliances which by reason of the particular disability cannot be done without aid (this will not include the adjustment of appliances which normal persons would be unable to adjust without aid, such as supports, belts, lacing at the back etc.); inability to eat due to loss of coordination of upper extremities or through extreme weakness; inability to attend to the wants of nature; or incapacity, physical or mental, which requires care or assistance on a regular basis to protect the claimant from hazards or dangers incident to his or her daily environment.
Not all of the disabling conditions in the list above are required to exist. It is only necessary that the evidence establish that the veteran or spouse needs “regular” (scheduled and ongoing) aid and attendance from someone else, not that there be a 24-hour need.
Determinations of a need for the aid and attendance is based on medical reports and findings by private physicians or from hospital facilities.
What Is the Amount of the Aid and Attendance Benefit?
Effective December 1, 2011, the Veterans A&A Pension can provide:
$20,447 per year (~$1,704 per month) for a qualified veteran;
$24,239 per year (~$2,020 per month ) if the veteran is married;
$13,138 per year (~$1,095 per month ) for a surviving spouse of a qualified veteran;
$31,578 per year (~$2,631 per month ) if both spouses are qualified veterans.
Is Aid and Attendance Only For Low Income Veterans?
No, and this is the primary reason that this benefit is so widely misunderstood. If you speak to a Veterans Service Representative in a regional VA office and ask them about the Veterans Aid and Attendance benefit, they will typically ask for your household income. When you tell them your household income, they will compare it to a chart and most often tell you that you earn too much income to receive the benefit. While the information they provide may be technically accurate, what they typically don’t explain is the “income” for Veterans Administration purposes (sometimes called IVAP or “adjusted income”) is actually your household income minus your recurring, unreimbursed medical and long-term care expenses. These allowable, annualized medical expenses are such things as health insurance premiums, home care expenses, the cost of paying a family member or other person to provide care, the cost of adult day care, the cost of an assisted living facility, or the cost of a nursing home.
To be able to receive the Veterans Pension with Aid and Attendance benefit, the veteran household cannot have adjusted income (i.e., household income minus unreimbursed medical expenses) exceeding the Maximum Allowable Pension Rate — MAPR — for that veteran’s Pension income category. If the adjusted income exceeds MAPR, there is no benefit. If adjusted income is less than the MAPR, the veteran receives a Pension income that is equal to the difference between MAPR and the household income adjusted for unreimbursed medical expenses. The Pension income is calculated based on 12 months of future household income, but paid monthly.
How is the Aid and Attendance Benefit Calculated?
The monthly award is based on VA totaling 12 months of estimated future income and subtracting from that 12 months of estimated future recurring, unreimbursed medical expenses. Allowable medical expenses are reduced by a deductible to produce an adjusted medical expense which in turn is subtracted from the estimated 12 months of future income.
The new income derived from subtracting adjusted medical expenses from income is called “countable” income or IVAP (Income for Veterans Affairs Purposes). This countable income is then subtracted from the Maximum Allowable Pension Rate — MAPR — and that result is divided by 12 to determine the monthly income Pension award. This cash benefit is paid in addition to the family income that already exists.
Filing a Claim
Filing a claim for the Veterans Aid and Attendance Pension Benefit is complex and time-consuming. If you want to do it correctly, it’s important to get qualified assistance. Just knowing which form to fill out and how to complete it is a complex endeavor in itself. Even if the proper form is completed, failure to check a single box may result in a complete denial of your claim.
The application process involves: obtaining evidence of prospective, recurring medical expenses; appointments for VA powers of attorney and fiduciaries; and a thorough understanding of the application process. Often, qualification for this benefit involves reallocation of assets and shifting of income in order to qualify, and these re-allocations may have significant impact on Medicaid eligibility.
Given that many veterans who need the Aid and Attendance Benefit will eventually wind up also needing Medicaid, this process should not be attempted without the help of a qualified elder law attorney who thoroughly understands both the Veterans Aid and Attendance Benefit and the Medicaid program, as well as the interaction between these two benefit programs.
We assist Level 4 clients of our firm, at no charge, in completing the required paperwork.
Evan H. Farr is an Accredited Attorney with the U.S. Dept. of Veterans Affairs, and the Farr Law Firm is an Elder Law and Estate Planning Firm that helps Veterans and their spouses obtain the financial assistance to which they are entitled. If you are a Veteran or spouse of a Veteran and you need assistance in your home, or are living in or considering moving into an Assisted Living Facility or Continuing Care Retirement Community, please contact us to see if you might qualify for the Veterans Aid and Attendance Special Pension Benefit. Call us today and take the first step towards gaining the peace of mind that comes with a good Long-Term Care Plan.
The most important thing that you can do in planning for future contingencies is to act now. The future may hold limited resources or health problems for you and either one of these may prevent you from taking care of the things that you can easily achieve today.
In Part 1 of this series, I showed how making a good Long-Term Care Plan is an urgent and necessary step in preparing for the future. In Part 2, I outlined the three most essential documents found in that plan, namely, a General Power of Attorney, Advance Medical Directive with a Long-Term Care Directive and a Lifestyle Care Plan. In the last installment, Part 3, I discussed using long-term care insurance as part of a Long-Term Care Plan. As we saw in Part 3, Virginia’s Long-Term Care Insurance Partnership Program offers government-endorsed “Medicaid Asset Protection” to consumers who buy long-term care insurance.
Part 4 will now discuss how our Living Trust PlusTM Asset Protection Trust can protect you from probate (as does a Revocable Living Trust) PLUS protect you from the expenses of long-term care.
You Can’t Afford to Ignore Long-Term Care Expenses
Whether you’re rich, poor, or somewhere in between, you cannot afford to ignore the potentially devastating costs of nursing home care and other types of long-term care. Nursing homes are the most likely and one of the most expensive creditors that most Americans are likely to face in their lifetimes. Remember the following statistics that I cited in Part 1 of this series:
- About 70% of Americans who live to age 65 will need long-term care at some time in their lives, over 40 percent in a nursing home.
- As of 2008, the national average cost of a private room in a nursing home was $212 per day or $77,380 per year.
- The average person age 65 today will need some long-term care services for three years. Women need care for longer (on average 3.7 years) than do men (on average 2.2 years). Twenty percent of them will need care for more than five years.
- Long-term care is not just needed by the elderly. A recent study found that 46 percent of group long-term care claimants were under the age of 65 at the time of disability.
Contrast the above long-term care statistics with statistics for automobile accident claims and homeowner’s insurance claims:
- Between 2005 and 2007, an average of only 7.2% of people per year filed an automobile insurance claim.
- Between 2002 and 2006, an average of only 6.15% of people per year filed a claim on their homeowner’s insurance.
Revocable Living Trusts Don’t Help
A revocable living trust is a wonderful tool to protect your assets from the expenses of probate, but it does not protect your assets from the expenses of long-term care while you’re alive. Because you have 100% unlimited access to the funds in a revocable living trust, so do your creditors, including nursing homes and State Medicaid programs.
Living Trust PlusTM: Protect Assets from Probate PLUS Lawsuits PLUS The Expenses of Long-Term Care
In response to this limitation of revocable living trusts, I have developed a unique solution – a special type of irrevocable trust called the Living Trust PlusTM that functions very similarly to a revocable living trust but protects your assets from the expenses and difficulties of probate PLUS lawsuits PLUS the expenses of long-term care while you’re alive, in addition to a multitude of other financial risks during your lifetime. The Living Trust PlusTM protects your assets from lawsuits, auto accidents, creditor attacks, medical expenses, and — most importantly for the 99% of Americans who are not among the ultra-wealthy — from the catastrophic expenses often incurred in connection with nursing home care. For most Americans, the Living Trust PlusTM is the preferable form of asset protection trust because, for purposes of Medicaid eligibility, this type of trust is the only type of self-settled asset protection trust that allows a settlor to retain an interest in the trust while also protecting the assets from being counted by state Medicaid agencies.
Even though the Living Trust PlusTM is “irrevocable,” it can still be terminated so long as all interested parties (typically you and all of your beneficiaries) agree to terminate it. Additionally, you remain in control of your assets because:
- you can be the trustee if desired;
- you retain the right to receive all of the trust income;
- you retain the right to live in and use your real estate;
- you retain the right to change trustees; and
- you retain the right to change beneficiaries.
The Living Trust PlusTM has no effect on your income or your income taxes.
If you’re a client or potential client who would like more information about the Living Trust PlusTM, please call us at 703-691-1888 to contact us for an appointment, visit the Living Trust PlusTM web site at http://www.livingtrustplus.com or click here to register for one of our upcoming Living Trust PlusTM informational seminars.
If you’re an attorney interested in more information about the Living Trust PlusTM or interested in the possibility of licensing the Living Trust PlusTM Asset Protection System, visit the Living Trust PlusTM web site at http://www.livingtrustplus.com and click on the link labeled “For Attorneys.”
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We work as a team so that there is always someone available to help you when you need it. All of the people who work in our office are committed to this goal. They are all caring and compassionate people, and they understand the problems that you and your family may be facing. To get to know our team, please click here.
“Long-Term Care” refers to the broad spectrum of medical and support services provided to persons who have lost some or all capacity to function on their own due to a chronic illness or disabling condition, and who are expected to need such services over a prolonged period of time. Long-term care can consist of care in the home by family members (assisted by voluntary or employed help), adult day health care, or care in assisted living facilities or nursing homes.
In Part 1 of this series I mentioned that 60% of us will need long-term care at some point in our lives. When this statistic is put in perspective with the relatively low likelihood of making an automobile or homeowner’s insurance claim, the risk that you or I will need long-term care at some point in the future is shocking. Unfortunately, the majority of Americans are either unaware of these statistics or refuse to plan for the often catastrophic costs of long-term care. Part 1 of this series outlined the necessity to create a good Long-Term Care Plan in addition to, or as part of, your Estate Plan; Part 2 will now discuss the three most essential documents found in a good Long-Term Care Plan, as well as two additional documents that are often also part of a Long-Term Care Plan.
General Power of Attorney
A General Durable Power of Attorney (POA) containing Asset Protection Powers is the first essential document. Not all POA’s are created equal; it is crucial that this document be prepared by a knowledgeable and experienced Elder Law Attorney. One way to ensure the qualifications of your attorney is to look for one who is Certified as an Elder Law Attorney by the National Elder Law Foundation, the only organization accredited by the American Bar Association to certify lawyers in the specialty area of Elder Law. For a list of Certified Elder Law Attorneys, please visit http://www.nelf.org/findcela.asp.
A POA (always “durable” when used in connection with estate planning and long-term care planning) authorizes your “Agent,” sometimes called an “Attorney in Fact,” to act on your behalf and sign your name to legal and financial documents. It is an essential tool in the event that, due to age, illness, or injury, you are unable to carry on your legal and financial affairs. Asset Protection Powers written into the POA are essential in order for your Agent to protect your assets from the often-catastrophic expenses of long-term care. Attorneys who are not experienced Elder Law Attorneys often fail to put these essential Asset Protection Powers into the POA.
A properly-drafted POA is designed to avoid the need to go through a court-supervised conservatorship proceeding, which is a time consuming, expensive, and publicly embarrassing process whereby someone goes to court to have you declared incompetent and to be appointed as your Conservator. The Conservatorship process is often referred to as a type of “living probate” because the Conservator is subject to all the rules of the probate court, including the onerous requirement of filing annual accountings with the Court. State laws vary regarding the use and acceptance of a power of attorney.
Advance Medical Directive
The second essential document in a good Long-Term Care Plan is an Advance Medical Directive (AMD) containing a Long-Term Care Directive. As with General Powers of Attorney, every lawyer drafts AMDs differently, and most attorneys do not include a Long-Term Care Directive within the AMD. Therefore, it is again in your best interest to have your AMD written by an attorney who specializes in long-term care planning, such as a Certified Elder Law Attorney.
An AMD (also called a Medical Power of Attorney or a Health Care Power of Attorney) authorizes another person (called your “Medical Agent”), to make decisions with respect to your medical care in the event that you are physically or mentally unable to do so. This document includes the type of provisions that used to be in what was commonly called a “Living Will,” allowing you to indicate your wishes concerning the use of artificial or extraordinary measures to prolong your life in the event of a terminal illness or injury. In the AMD you will also appoint a “Medical Agent” and give that person the power to consent to medical and health care decisions on your behalf with regard to providing, withholding, or withdrawing a specific medical treatment or course of treatment when you are incapable of making or communicating an informed decision on your own behalf. A comprehensive AMD will also allow you to indicate your wishes with regard to organ donation, disposition of bodily remains, and funeral arrangements.
A properly-drafted AMD is designed to avoid the need to go through a court-supervised guardianship proceeding, which is a time consuming, expensive, and publicly embarrassing process whereby someone goes to court to have you declared incompetent and to be appointed as your Guardian, typically at the same time they are requesting appointment as your Conservator.
Long-Term Care Directive
Most importantly for your Long-Term Care Plan, your AMD should include a Long-Term Care Directive (or this could be drafted as a separate document), which will allow you to make your desires known in the event you need long-term care in the future. For instance, do you want to remain at home and receive home-based care as long as possible, regardless of cost, even if it drastically reduces or entirely depletes your estate? Or would you prefer to remain at home and receive home-based care only if it doesn’t drastically reduce or entirely deplete your estate? If nursing home care is absolutely required, would you like to protect as much of your assets as can be legally protected so that you can qualify earlier for publicly-funded Medicaid benefits? If so, do you prefer that the protected assets be used to enhance your quality of care, or to provide an inheritance for the beneficiaries of your estate?
In order to be easily accessible when needed, your AMD should be registered with an electronic archive service that can immediately fax the document to any desired destination. Some Elder Law Attorneys, including our firm, provide such registrations to clients at no charge.
Lifestyle Care Plan
The third essential document that is found in a good Long-Term Care Plan is a document called a Lifestyle Care Plan, also known as an Advance Care Plan. The Lifestyle Care Plan is a document that is created by special software that gathers, organizes, stores and disseminates information provided by you in an interview, in order to guide those who you will depend or for future care. The Lifestyle Care Plan identifies your specific needs, desires, habits and preferences and incorporates all of this information into a document that your future caregiver can use to provide you with the best possible long-term care.
As an example, Alice wrote in her Lifestyle Care Plan that if Alzheimer’s disease or some other type of dementia inhibited her mental abilities to communicate or recognize her surroundings, she wished to be in a respectable facility and only asked that she be visited and brought chocolates. To her children this request seemed silly at the time, but when her mental capacities did diminish, the instructions were there. No one had to wonder if they should try to take care of Alice at home and how they would do it. Without guilt or question they placed her in a respectable facility that took care of her needs. All they had to do was make loving visits, and of course they brought chocolates.
Because of the importance of the Lifestyle Care Plan, the Farr Law Firm provides one to all of our clients as part our comprehensive Long-Term Care Planning services. To learn more about the benefits of having an Advance Care Plan, please click here or visit our Web site at: www.farrlawfirm.com/advance-care-plan.htm
A good Long-Term Care Plan will always include the three documents mentioned above, and will typically also include a Living Trust — either a Revocable Living Trust (RLT) or the Living Trust Plus™ (LTP).
An RLT generally provides for the creator of the trust to have full use of the trust income and principal for life. On the death of the creator, the assets may continue to be held in trust (or may be distributed) for the benefit of the named beneficiaries, such as the grantor’s children. Although the most important benefit of the RLT is to avoid probate, a well-drafted RLT also can help protect from incapacity and can therefore be an important part of a Long-Term Care Plan. Similar to a General Power of Attorney, an RLT can provide uninterrupted management of your assets by your trustee if you become incapacitated, sparing you and your family from having to go through the expense and complexities of a court-appointed conservatorship. It is important to note that an RLT does not protect your assets from the expenses of long-term care. On the contrary, the assets in an RLT must be spent, if necessary, in providing long-term care, even if that means spending down all of the assets in the RLT to provide such care. For more information on RLTs, please click here or visit our Web site at: www.farrlawfirm.com/revocable.html
The Living Trust Plus™ is a living trust that is designed to protect your assets from probate PLUS lawsuits, PLUS nursing home expenses. In other words, the LTP protects your assets from the complications and hassles of probate and from other financial risks, including the threat of lawsuits, auto accidents, creditor attacks, extended hospitalization, and — most importantly – the catastrophic expenses associated with nursing home care. Part 4 of this series will explore the LTP in detail.
A good Long-Term Care Plan will always include a General Power of Attorney, Advance Medical Directive, and Advance Care Plan, and will typically also include a Living Trust — either a Revocable Living Trust or the Living Trust Plus™. However, as mentioned in Part 1, these essential legal documents are only part of the requirements for a good Long-Term Care Plan. The other important component is a plan for how to pay for long-term care. The next installment in this series will discuss protecting your assets by purchasing long-term care insurance.
The Farr Law Firm specializes in long-term care planning and we would be happy to assist you in your preparations. Please visit us at www.VirginiaElderLaw.com or call us at 703-691-1888.
The Living Trust Plus™ is a unique solution to a large problem.
Evan developed this trust as a means of protecting assets while the creator is still living. Including the most expensive creditors in existence: nursing homes. Any form of long-term care is expensive, and long-term care insurance is not easy to obtain for many people, either due to eligibility requirements, pre-existing conditions, or the high cost.
Many attorneys are not aware this trust even exists, and it goes without saying in detail how absent from public knowledge this form of asset protection really is. Our educational video series will shed some light on this trust that is growing in popularity, yet still relatively unknown on a national scale.
Enjoy our Living Trust Plus™ Video Series
Today is the big day! Evan Farr’s new book – “Protect and Defend” — is available NOW!
“Protect and Defend” is the book that Evan has been working on for the past 8 months along with several of America’s other leading
This new book delivers to you practical advice based on the combined years of top-level experience. In each chapter, you’ll get exclusive
access to a vast depth of expertise as the author’s tackle some of today’s most crucial legal issues — issues that affect all of us every day.
You absolutely need to know how to put the law on your side whether you’re facing an immediate emergency or looking for long-term
“Protect and Defend” brings you proven strategies to help you do just that, before it’s too late.
Just for purchasing the book today, and helping us get this book launch off to a great start, Evan and the other
authors have put together a huge bonus package for you! If you read the posting yesterday, you already know all
about the thousands of dollars worth of bonuses that we’re talking about.
And here at long last is the link to purchase “Protect and Defend” for just $19.95:
And you’ll get thousands of dollars of bonuses, just for spending twenty bucks! BUT REMEMBER YOU MUST BUY
THE BOOK AT AMAZON.COM TODAY IN ORDER TO ALSO RECEIVE THE FREE BONUSES!
To claim your free bonuses, once you buy the book, just email your Amazon.com receipt to: email@example.com
and they’ll send the bonuses right over to you!
As I announced on Monday this week, over the last 8
months I have been working on a book with some of
America’s Premier Legal Experts from all around the
country. In the process of writing this book, we all
agreed to share with you the vital information needed
to Protect and Defend your family, your business and
The great news is that our book –
“Protect and Defend” — is coming out
Just for purchasing the book
tomorrow on Amazon.com,
and helping us get off to a
great start, we’ve put together
a huge bonus package for you!
I will send you a link to buy
the book tomorrow on Amazon,
but here’s a sneak peak at all the
great stuff you’ll get JUST for
Just for purchasing the book tomorrow on Amazon, and
helping us get off to a great start, you’ll get all of these great
Once again, I’ll send you a link to buy the book
tomorrow for just $19.95, and once you buy it,
just email your Amazon.com receipt to:
and they’ll send the bonuses right over to you!
STOP AND THINK! Do you know what legal steps you need to take to
safeguard… Your business? Your money? Your family? Maybe you were
caught in a car accident where you’re not sure of your rights, or
you’re looking for a lifetime of legal protection for your company,
your family or your wealth. Whatever the case, you need to know what
it takes to protect your rights and defend you and your loved ones
from unforeseen legal threats.
Over the last 8 months I’ve been working on a book with America’s
leading attorneys from across the country that will help answer these
vital questions. Protect and Defend is the book that delivers to you
practical advice based on their years of top-level experience.
In each chapter, you’ll get exclusive access to their expertise, as
they tackle some of today’s most crucial legal issues-issues that
affect us all every day. As you know, the law can be your best friend
or your worst enemy. And you absolutely need to know how to put it on
your side whether you’re facing an immediate emergency or looking for
long-term solutions. Protect and Defend brings you proven strategies
to help you do just that-before it’s too late.
We’ll be launching the book this week, Thursday, July 26th.
(don’t worry I’ll remind you!), and I’ve put together a huge bonus
package for you if you’ll help us launch the book on Thursday!
As I said, I’ll remind you, but if you are willing to help us launch
with great success, by buying the book (It’s only $19.95!), then I’ll
give you hundreds of dollars worth of bonuses in addition to the
great ideas you will get from reading the book.
I appreciate your support and I’ll get back with you in a couple of
days to remind you about the launch and to tell you more about the
bonuses I’m putting together!
Evan H. Farr, CELA
Certified in Elder Law by the National Elder Law Foundation
Farr Law Firm, 10640 Main St., Suite 200, Fairfax, VA 22030
Tel: 703-691-1888 | Fax: 703-940-9160
*Virginia has no procedure for approving certifying organizations
Why is it so important for newlyweds to address critical estate planning matters? In the simplest of terms: life is full of surprises and it can save you a lot of money. When love is in the air, it is easy to overlook the devastating consequences of unexpected events such as illnesses, accidents, or tragedy. If tragedy does strike and no plan exists, family feuds can arise and cost thousands of dollars. The necessity of an estate plan for newlyweds with children is even more pronounced.
Younger Couples Often Take Advantage of a Revocable Living Trust
Some Older Couples Prefer a Living Trust Plus™ to Protect Assets from Catastrophic Expenses Associated with Long-Term Care
Note: If you are an attorney and are interested in offering your clients the Living Trust Plus™ follow this link.
Some Documents are Important to All Couples
Some attorneys and others interested in the field of Medicaid Asset Protection may have been a bit worried about a recent case arising out of Wisconsin — Hedlund v. Wisconsin Dept. of Health Services (Wis. Ct. App., No. 2010AP3070, Oct. 13, 2011)
The basics of the case
In this case, the court affirmed a ruling that a Medicaid applicant who transferred assets to her children, who in turn put those same assets into an irrevocable trust for the Medicaid applicant’s benefit, is ineligible for Medicaid because the trust is a countable asset under state law, despite the fact that the transfer occurred 17 years prior to applying for Medicaid.
If you are an estate planning or elder law attorney offering pre-crisis Medicaid asset protection through the proper use of an irrevocable, income-only trust, it need not cause you any worry.
And if you are not an attorney but have created the right type of irrevocable, income-only asset protection trust, you, too need not worry. The irrevocable, income-only asset protection trust I provide my own clients with is the Living Trust Plus™ — I’m happy to say the trust is just as effective as ever.
The opinion was released October 13th and is a case-in-point example of how an improperly drafted irrevocable trust, along with a badly executed asset protection plan, will fail. More information on the Living Trust Plus™ is available here.
The question before the court
The question for the court, based on its interpretation of a Wisconsin statute, was whether the trust was established by the children “at the direction or upon the request of” the Medicaid applicant.
Although the trust instrument in this case was irrevocable, the trust bore no relation to an income-only trust, but rather was a trust established by the children of the Medicaid applicant, using the exact assets previously gifted by the parents to the children.
This trust was apparently intended to be some sort of special needs trust because the trust instrument provided that the income and corpus of the trust were to be used only when no other funds are available and to supplement any funds the beneficiaries were entitled to receive as social security and medical assistance benefits.
However, though not addressed by the court, the trust was clearly defective as a special needs trust because the stated purpose of the trust was “to provide for the support and welfare of Clarence and Lucille Hedlund,” and a trust intended to provide for “support and welfare” is clearly not a special needs trust.
Why the court ruled the way it did
Most importantly, the trust did not prohibit trust corpus from being distributed to the Settlors. On the contrary, the trust provided that the income and corpus of the trust were available to the Settlors.
So once the finding was made that the trust assets were “assets of the individual or the individual’s spouse” and “were used to form all or part of the corpus of the trust,” the finding that the assets were fully available to the Medicaid applicant was absolutely correct, because the trust allowed corpus to be used for the benefit of the Medicaid applicant.
A properly- prepared income-only trust, such as the Living Trust Plus™, would have avoided this result, because the Living Trust Plus™ is a trust that offers true asset protection in connection with Medicaid eligibility, as well as in connection with all other creditors.
For information on the Farr Law Firm’s service (Level 3) – The Living Trust Plus™ — follow this link and view the .PDF file. You may also notice other services you may need or have not thought of. Planning for long-term care (whether for you or a spouse or a parent) is a difficult mental hurdle. But the sooner you start, the more assets you can protect and the better quality and dignity of life loved ones can enjoy.