Most traditional estate and elder law firms ask the question, “What happens to your estate when you die?”
We ask, “What happens if you live and need to pay for care?”
In today’s world, much of your estate can be lost to the high cost of long term care. Do you have a plan to protect your estate?
At Sykes Elder Law, we can tailor a plan to help protect assets for the long term against loss due to:
- Nursing care costs
- Spendthrift relatives
- Probate fees
A key feature of many of our asset protection plans is our Management, Protection & Income Trust™ (MPI Trust™ for short). An MPI Trust™ allows our clients to lock away assets for long-term protection, while still receiving income and enjoying the ability to decide who will receive those assets upon death. Among the advantages are:
Immediate – Immediately upon establishing and funding the trust, the client receives the benefit of protection from loss due to creditors, lawsuits, or scam artists that prey upon the elderly. While assets are in the trust, they are not subject to loss due to problems that the trust beneficiaries may experience: creditors, lawsuits, divorce, spendthrift habits, and so on. If a trust beneficiary has kids in college, the trust assets will not interfere with financial aid eligibility.
After 5 years – An MPI Trust™ has the most asset protection potential for those whose health and budget will allow them to leave the assets undisturbed for five years. At that time, assets in the trust are not countable for Medicaid purposes, and no transfer made to the trust is subject to Medicaid ineligibility penalty. Clients can qualify for Medicaid benefits for nursing home care, and the trust assets can remain undisturbed. Upon death, trust assets will not be lost to Medicaid’s estate recovery program.
Capital gains tax can take a significant bite out of assets that have appreciated in value, like a home or a stock portfolio. Upon death, most taxpayers enjoy a break from capital gains taxes on their home (known as the § 121 exclusion) or other appreciated assets (due to something called a “step-up in basis” for their heirs).
With properly designed provisions, clients can continue to enjoy these tax advantages for items placed into the trust.
Some people try to protect assets by simply giving them away. An MPI Trust™ offers a better solution – asset protection while maintaining a level of control superior to gifting. The following chart compares the two approaches:
Increasingly, many clients wish to avoid the expense and delay of the probate process when they die. Our MPI Trust™ allows the trust assets to be distributed quickly to beneficiaries without going through the probate process or incurring probate fees.
An MPI Trust™ is not the right solution for every person, couple, or family. We have identified key guidelines to determine suitability, including age, health, asset amounts, income needs, and asset protection objectives. We strive to make sure that each client pursues the long-term asset protection strategy that is right for them.