Our goal as the premier Idaho estate planning firm is to provide as much information as we can to our clients about estate planning so that they can make meaningful decisions that will help them both while they are alive and after they pass away. Our team of Idaho estate planning lawyers are all experienced and knowledgeable and can help each client customize their own personal estate plan. Often our clients choose to have a living trust as part of their estate planning documents and we help our clients both create, customize and fund their living trusts.
At the Racine Olson Law Firm our team of Idaho estate planning lawyers consists of partners Randy Budge and Lane Erickson and attorneys Nate Palmer and Dave Bagley. Each of the attorneys on our team has a depth of experience and knowledge about estate planning that helps them create customized and meaningful plans for each client. we do not use a cookie cutter approach. rather, we work with each individual client, and their family, to determine what their needs are so that we can provide the best advice and counsel as to the options that should be considered for their estate plan.
In the many discussions we have with our clients about Estate Planning, and more particularly about living trusts, we have found that there are four main things that our clients may not fully understand. If you are considering using a living trust as part of your estate plan here are the four things you should know.
1. Your Living Trust Does not Help You Qualify for MedicaidThe first thing that you should know, and perhaps the most widely misunderstood fact about trusts, is that a standard living trust will not help you qualify for Medicaid. Most living trusts that are created are revocable living trusts. The word revocable means exactly what it says, that the trust can be revoked, or changed by you at any time. If you are the creator of the trust and are also the trustee and the beneficiary of the trust, you retain complete control over all the assets that are placed into that revocable living trust.
The eligibility requirements the government imposes for a person to receive Medicaid are very stringent. Without getting into all the lawyerly terms, words and reasoning, it is sufficient to state that the assets that are contained in a revocable living trust will be considered assets that you own personally when you are being reviewed for eligibility for Medicaid because you retain control over them and because you can change the trust when you want and can transfer all the trust assets back to yourself if you choose.
Because Medicaid is a program that is designed to help those who have no assets and no money, having a living trust will not necessarily help you. If you have any appreciable or valuable Assets in the trust, the value of those items will be measured against your eligibility to receive Medicaid benefits.
2. Your Living Trust Does not Control Your Medical DecisionsThe second most important thing for you to understand about trusts is that they will not help you when it comes to making medical decisions while you are alive. Idaho allows each adult to make their own medical decisions for themselves. This means that you can decide what doctors you see, what medicines you take, and what medical procedures you either do or do not have.
If you are suffering from Alzheimer's or a stroke or some other injury or illness that takes away your ability to make these decisions, Idaho law requires that someone be named through a guardianship proceeding who will make these decisions for you. Some people believe that their living trust takes care of this. In reality, it does not. If you do not have a durable power of attorney or a power of attorney for health care as part of your basic estate plan, you are living trust will have no control over who is appointed to make decisions for you about your medical and health care.
3. Your Living Trust Does not Change Your Income TaxesThe third thing that you should understand is that having a living trust is not change your income taxes. Because most trusts are revocable, the law considers you to still be chargeable for any income that is earned by the assets that are held in that trust. As a result, the income earned by assets or property in the living trust will still require you to pay your regular income tax.
4. Your Living Trust Does not Protect Your Assets from Creditors (While You are Alive)An additional thing that you should understand about how living trust work is that they do not protect your assets from creditors while you are alive. Again, most trust are revocable living trust. If you place assets into a revocable living trust the law would consider you to still be the individual who has control over those assets and as a result those assets will be chargeable if your creditors seek to use them to pay debt you owe. Now, this may change after you die.
Most revocable living trusts have language in them stating that after your death, the trust then becomes irrevocable. If your trust has this language in it, then your creditors would not be able to control or take those assets after your death. In this instance your trust now would control those assets and they could not be taken away by creditors.
Enlist an Idaho Estate Planning and Probate Attorney to Help YouOur experienced Estate Planning team of attorneys can help you and your family with your Idaho estate plan or with a probate needs. Whether you are seeking your own customized Estate Plan or are in need of a Probate for a loved one who has passed, we are available to discuss your options and answer your questions at an initial consultation. Call us toll free at 877.232.6101 or 208.232.6101 for a consultation with the Racine Olson team. You can also email us directly at racine@racinelaw.net. We will answer your questions and will help you solve your Idaho Estate Planning and Probate problems.