When considering various estate planning options, most Pennsylvania families focus on how to pass assets to loved ones in a smooth and seamless manner. Many families fail to give proper consideration to the chance that a surviving spouse could end up requiring residential medical care, which can complicate matters of inheritance. In some cases, the cost of such care can completely deplete an inheritance, leaving little or nothing for children or grandchildren. When considering this estate planning matter, families should look into whether trusts can be a good fit for their planning needs.
When a loved one requires residential nursing home or rehabilitative care, many families turn to Medicaid to help cover those costs. Medicaid is an excellent resource, but coverage only becomes active after an individual or couple has depleted their own assets to a certain level. In the case of an inheritance, the wealth received after a spouse passes on might be completely lost before Medicaid coverage is possible.
By creating a trust and placing a large volume of assets within that vehicle, a family can provide for the passing down of accumulated wealth, while also ensuring that Medicaid will be available if and when needed. Assets held within a trust are not subject to loss due to divorce, financial troubles or legal judgments. Those assets also fall outside of the "spending down" requirements that Medicaid sets forth for nursing home coverage.
Families should give some thought to the risk of losing inherited assets if a residential care need should arise. For many in Pennsylvania, trusts provide a higher level of protection than simply using a will to pass all assets to a surviving spouse. By making good use of one or more trusts, it is possible to provide for the needs of a surviving spouse as well as one's children or grandchildren.
Source: greenbaypressgazette.com, "Review estate plan often to protect beneficiaries", Carissa Giebel, June 29, 2015