What is the "Irrevocable Trust" everyone is talking about?
The Irrevocable Trust is a specific type of trust that is set up to protect assets if you have to go into a nursing home. However, there are a lot of drawbacks to these trusts and they are not for everyone. First and foremost, once you put your money or assets in a irrevocable trust, you CANNOT get it back out.* These days there are a lot of care options available from home care to beautiful assisted living facilities. If you tie all your money up in an irrevocable trust, you won't have the money to pay for these other care options. If you had a choice, would you choose to go to a nursing home or a very nice assisted living? It's all about quality of life- where are you going to be happier?
Second, you have to wait 5 years after you put your money in the irrevocable trust before you can apply for Medicaid. Third, they will tell you that your children can get the money out of the irrevocable trust- really? So now you have to ask your children every time you want something? How is that going to work out?
As I said, irrevocable trusts may be a good planning options in certain situations, but not all situations. There are a lot of places out there trying to "sell" Irrevocable Trusts to everyone as the magic pill to protect your assets from the nursing home. Make sure you sit down with a reputable elder law attorney and see if an irrevocable trust is right for you.
* This includes "Castle Trusts" and "Domestic Asset Protection Trusts (DAPT)" where you can take assets out of the trust at any time. There is bad information going around that you can use these in Michigan to protect your assets from Medicaid if you have to go into long term care. This is NOT true.
Please call our office to set up a consultation to see how we can help you.