Estate planning - splitting assets and testamentary trusts

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richard
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Estate planning - splitting assets and testamentary trusts

Post by richard »

Some relatives are redoing their wills. They are a couple, each approximately 90 years old. They'd like to know how much of a hassle it would be to implement their lawyer's recommendation.

The lawyer recommends that they retitle their assets so that approximately half would be owned by each of them (at present almost everything is jointly owned) and have their wills provide that the surviving spouse would inherit in trust. The idea is that if the surviving spouse needs long-term care, such as a nursing home, she would only have to spend "her" assets (i.e., those not in trust) before becoming eligible for Medicaid. This would only be needed for the wife, the husband has coverage for long-term care (I'm not sure why they'd split assets rather than retitling almost all to him).

They have a great preference for simplicity and would prefer not to have to retitle assets or deal with a trust.

The question for those who've done something similar is how much of a hassle it would be to retitle assets, have separate accounts after a lifetime of joint accounts and having half of their assets in trust. I wouldn't think it's that bad, but I'm not a 90 year old who's been married 60 years.
craveonewave
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Re: Estate planning - splitting assets and testamentary trus

Post by craveonewave »

IANYL or theirs, but let's forget answering the question you posed.

Instead let's think about a 90 year old doing Medicaid planning, because there's a lookback period of 5 years with Medicaid for transfers/conveyances. She may be in a unique position, health or otherwise. But anyways.

I think the answer to this question is in the post; they prefer simplicity.

Also, might not hurt to have a second consultation.
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richard
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Re: Estate planning - splitting assets and testamentary trus

Post by richard »

craveonewave wrote:IANYL or theirs, but let's forget answering the question you posed.

Instead let's think about a 90 year old doing Medicaid planning, because there's a lookback period of 5 years with Medicaid for transfers/conveyances. She may be in a unique position, health or otherwise. But anyways.<>
As I understand it, there's a 5 year lookback if you're funding a trust with your own assets, but not if you are left a trust in a will by a third party (including a spouse). That's why they would have to retitle assets, so they would not be funding their own trusts.
Carefreeap
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Re: Estate planning - splitting assets and testamentary trus

Post by Carefreeap »

richard wrote:
craveonewave wrote:IANYL or theirs, but let's forget answering the question you posed.

Instead let's think about a 90 year old doing Medicaid planning, because there's a lookback period of 5 years with Medicaid for transfers/conveyances. She may be in a unique position, health or otherwise. But anyways.<>
As I understand it, there's a 5 year lookback if you're funding a trust with your own assets, but not if you are left a trust in a will by a third party (including a spouse). That's why they would have to retitle assets, so they would not be funding their own trusts.
Right so there's a 5 year lookback on the assets she's transferred, but if her spouse dies and leaves her a Trust those assets/income will count. A life estate won't but that starts getting really complicated.

I think the whole thing sounds complicated including getting on Medicaid and why they would want to go that route unless they had to. Do they not have much in assets? Being on Medicaid is no picnic.
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bsteiner
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Re: Estate planning - splitting assets and testamentary trus

Post by bsteiner »

Without knowing more about their assets, it's not possible to say whether this would be a good plan. However, if it is, or if it's what they want, they could change the ownership of their assets to tenants in common. That would enable them to divide their assets in a way that would have the least impact on the way they handle their affairs.
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