How Living Trusts Can Help Seniors

It’s an unfortunate fact that seniors can be prime targets for financial abuse and scams. Sadly, the elderly are often taken advantage of by strangers — and sometimes even their own family members. That’s why it’s important that planning is in place to help seniors protect themselves and their assets.

As we age, it can become increasingly difficult to manage our assets. Most of us will, at some point, need assistance with these details to help ensure that our financial and other assets aren’t depleted. If you or an aging loved one are looking for ways to safeguard assets, a Living Trust is often the best way to do so. Living Trusts allow seniors to rest assured that their finances and assets are managed by a trusted person.

What is a Living Trust?

Living Trusts help protect and manage the assets of those who cannot do so themselves due to age, illness, or disability. Many seniors assume that a will is the only protection they need. However, trusts are designed to safeguard the assets of the living, while wills only outline what happens to a person’s assets when the pass away. Furthermore, wills must go before a probate court and taxes must be paid on inheritances, while Living Trusts allow beneficiaries to avoid probate after their loved one’s passing.

To establish a Living Trust the owner, or grantor, places assets within the trust. The grantor then appoints a trustee to manage it and names beneficiaries to receive the assets of the trust when the time comes.

There are different types of Living Trusts. Let’s take a look at each and the ways these trusts can benefit seniors.

Testamentary Trust

A Testamentary Trust protects an elderly person’s assets when a spouse dies. Assets of the deceased are transferred into a trust — enabling the appointed trustee to make all financial decisions regarding those assets. This helps a surviving spouse by protecting him or her from fraud or mismanagement of assets. Trustees can help the surviving senior generate income from remaining assets via sales or investments and take advantage of tax benefits.

Revocable Living Trusts

A Revocable Living Trust safeguards seniors by making it more difficult for non-trustee family members to mismanage money or assets. The grantor (senior) can amend or revoke the trust at his or her own discretion without the consent of the beneficiary. This type of trust allows the grantor to stay in control of assets by either serving as a trustee or appointing one. In this case the grantor, serving as trustee and beneficiary of the trust, appoints a successor in the event he or she becomes incapacitated or dies. This appointed person is then responsible for disposal of the trust’s assets.

Irrevocable Living Trusts

An Irrevocable Living Trust is one that cannot be changed or revoked by the trustmaker. This means that the grantor/trustmaker gives up his or her rights to the assets once they are transferred. Seniors over 65 who are eligible for Medicaid often choose to transfer assets into an Irrevocable Living Trust to avoid having to dispose of assets in order to remain eligible for Medicaid coverage or long-term care benefits.  Once assets are in an irrevocable trust, they cannot be counted for Medicaid eligibility purposes, but there could be a penalty for transferring assets to an irrevocable trust.

An elder law attorney can assist in determining the best way to set up this type of trust and how to best transfer assets based on Medicaid stipulations. An Irrevocable Living Trust can provide income for seniors and their spouses. It also protects their property and other assets from being seized to pay for medical costs, without impacting Medicaid eligibility. This type of trust can also remain in place for a surviving spouse after the grantor’s death.

The sooner assets are placed in an Irrevocable Living Trust the better, as a penalty will be assessed by Medicaid during the first 5 years the trust is in existence (if Medicaid is required during that time).

Ultimately, Living Trusts give seniors more control over their assets than a will, allowing them to set parameters and stipulations and appoint a trusted advisor to help them make decisions. If you or your loved one would like more information about setting up a Living Trust, we can help. Contact our firm today to discuss how we can tailor a trust to your specific situation and needs.

Way You Can Protect the Elders You Love From Exploitation

Every year, many Older Americans are targeted by criminals who try to manipulate seniors into giving them their personal information. The criminals then use this information to access bank accounts and other important services. As a senior or the child of an aging parent, exploitation should be taken seriously. Unfortunately, it is becoming increasingly more difficult for seniors to identify when they are being targeted.

Recognizing the common elements of a scam is the first step to help ensure your senior loved one does not become a victim of financial exploitation. To help you learn more, we want to share some tips about protecting your loved ones from exploitation.

1. Talk to your senior loved one.

When trying to protect your senior loved one from exploitation, it is important to take the time to educate him or her about common scams and how to identify them. Often, we see that seniors are embarrassed about falling for a scam and do not want to share this with anyone. Encourage your senior loved one to talk to you if someone unfamiliar asks for their personal details. In addition, ask them to verify with you if someone asks them to send money to help with a family emergency. Together you can work to identify criminals and any potential scams.

2. Monitor your loved one’s finances.

Another way to help keep your senior loved one protected from scams is to monitor their finances. Either you or another close friend or family member should regularly check to ensure that there are no suspicious charges or sudden decreases of funds in your loved one’s bank account. Sharing this information with your senior loved one can help everyone involved feel more at ease.

3. Talk to your loved one about creating a durable power of attorney.

A durable power of attorney is a powerful legal tool that can help protect your loved one from financial exploitation. If monitoring your loved one’s finances is not enough, we encourage you to discuss this planning option with your loved one. This document allows a close friend, family member, or trusted advisor to take appropriate actions on your loved one’s behalf if something suspicious is happening to your loved one’s funds.

Sadly, financial exploitation is a serious problem that needs to be addressed. We encourage you to talk to your aging loved ones about common scams and how to protect themselves from becoming a victim of exploitation. If you have any questions or concerns about the senior loved one in your life or about the estate planning tools they need both now and in the future, do not hesitate to get in touch with us.

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