How a trust can protect your legacy in your golden years

Retirement planning is an important process that helps ensure your financial stability as you age. For many adults, planning for retirement goes hand-in-hand with estate planning for the future. Some of the same issues need consideration in estate and retirement planning.

Quite a few people don’t really consider what will happen if they experience a significant decline in their overall health as they age. However, the older adults become, the more likely it is they will experience medical issues that will require substantial levels of care.

Planning for that care can be part of planning for your retirement through the use of trusts, which can also be a way to structure your assets so that you have an estate left when you die.

If you don’t plan now, you may spend everything on future residential care

No one wants to think about spending their last years of life in a nursing home. Imagining the best outcome, including optimal health, is how most people prefer to visualize the future. Still, there will be many people who will require nursing home care who did not visualize this as a part of their future.

Planning for what may be a likely outcome is a smart decision. Otherwise, you may feel blindsided when confronted with the unpleasant reality of paying for skilled nursing care or residency in a nursing home. Either of these critical services could cost thousands of dollars a month. Medicare will not cover these costs. Neither will most private insurance policies.

You can’t wait until you need help to plan

You will likely rely on Medicaid to close that gap in funding. Medicaid is a program intended for those with few assets and little to no income. The government will review your financial circumstances going back five years when you apply for Medicaid.

If there are large gifts or transfers of assets during those five years, you will likely have to pay a penalty that will equal the amount of those assets that could have gone to pay for your care. You need to have a long-term care plan in place well before you need those benefits.

Putting your assets in a trust doesn’t mean they aren’t still yours

For many older adults, the creation of a trust is the easiest solution to concerns about long-term care planning or even estate taxes for their heirs. Unfortunately, trusts have an unfairly negative reputation, in part because people don’t really understand how they work.

Because trusts require funding, individuals must move certain assets into the trust. Those assets can then only be used by a beneficiary or trustee for the trust in accordance with the rules outlined in the trust document. Carefully developing a trust can protect you from the financial downfall of no longer having control over your assets.

You can easily include provisions in the language that allow you to use the assets that you place in the trust for handling your cost of living expenses and similar financial obligations. A trust may be the best way to ensure that someone can qualify for state aid without giving up control over assets or possessions.

Creating and maintaining a trust may seem confusing, but with help from a skilled estate planning or long-term care planning attorney in Georgia, it can be a smooth and straightforward process.

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Kevin Tharpe

With 25 years of experience, Kevin understands how estate planning, special needs planning, and government benefits programs work together. This is a crucial element of a thorough plan. He explains your eligibility for benefits programs and ensures that you do not make costly mistakes that may disqualify you or deplete your assets.

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