Irrevocable Trusts
An irrevocable trust cannot be changed or amended by the donor. Any property placed into the trust may only be distributed by the trustee as provided for in the trust document itself. For instance, the donor may set up a trust under which he or she will receive income earned on the trust property, but that bars access to the trust principal. This type of irrevocable trust is possible for Medicaid planning in certain circumstances.
Testamentary Trusts
A testamentary trust is a trust created by a will. Such a trust has no power or effect until the will of the donor is probated. Although a testamentary trust will not avoid the need for probate and will become a public document as it is a part of the will, it can be useful in accomplishing other estate planning goals. For instance, the testamentary trust can be used to reduce estate taxes on the death of a spouse, provide for the care of a disabled child in a special needs trust or provide for children or others who are not responsible with their money and/or have creditor problems.
Supplemental Needs Trusts a/k/a Special Needs Trusts
The purpose of a supplemental needs trust is to enable the donor to provide for the continuing care of a disabled spouse, child, relative or friend. The beneficiary of a well-drafted supplemental needs trust will have access to the trust assets for purposes other than those provided by public benefits programs. In this way, the beneficiary will not lose eligibility for benefits such as Supplemental Security Income, Medicaid and low-income housing. This is typically are remainder trust under a will or living trust.
Credit Shelter Trusts
Credit shelter trusts are a way to take full advantage of the estate tax exemption. Due to the uncertain estate tax at this time, credit shelter trusts may not be needed.
Medicaid Planning Trusts
In certain situations, the client may be able to place some of their assets into an irrevocable trust for their benefit. While the rules are very strict, this may provide for Medicaid eligibility and provide other advantages as well.
To schedule an initial consultation to discuss any of these irrevocable trusts, call us at 727.475.6680 or contact us online any time.
