I have a question regarding my mom’s irrevocable trust created on 3/5/16 at your firm. Mom is in an assisted living facility and I take care of her expenses. So far I have not touched any of the monies in the Trust but probably by the end of next year or early in 2022, I will need to draw upon monies in the trust for her expenses. What do I need to know about doing that?
WOW, this is a very common but loaded question. In fact, several of you submitted this question to me in various forms for different reasons…all attempting to access the money for the grantor of the irrevocable trust. My answer to the question above can be applied to all of these similar situations, and the answer will be the same for all. The answer is NO!
Okay, reality check everyone. When mom transferred her assets into the trust she knew that she could not get them back. We told her this clearly. The trust said so explicitly. She had to do it that way, as these trusts only protect assets from Medicaid if you cannot get the assets back, which then starts the look-back period. Remember, If you can get them, Medicaid can get them. That’s the way this works. So the trust prohibits using the money in the trust for your mom’s assisted living.
You may be thinking…what if the Trustee simply defies the terms of the trust and gives some of the assets back to mom or pays a bill for her, like her monthly assisted living expenses? Don’t think that way! The trust would be destroyed according to Medicaid. They figure that if you can ignore the trust so will they!
The bottom line is that the trust can not pay for mom’s assisted living expenses.
But YOU can!
Let me be clear. The trusts I create for my clients do not allow the grantor (mom) to get the money back, but that does not mean that we trap the money in the trust until her death. My Medicaid oriented Irrevocable trusts allow the trustee to pay out trust assets to the trust beneficiaries, usually the children and grandchildren. You can receive your inheritance early. Once the child and/or children and/or grandchildren receive the assets, they can do anything they want with this gift. Why? Because they own it, with no strings attached. If they want to fly the next day to Tahiti, they can…first class ( I hope they send mom a nice postcard). If they want to gamble it all away in Las Vegas, they can. If they want to buy drugs, they can. If they want to buy a car or a house, or anything else for themselves, they can. If they want to help their mother pay for her long-term care, they can. It is their money and they can do anything they want with it.
I hope this helps! Please forward this information to your friends and relatives.
As always, please send me your questions. If you are thinking about it, others are probably too, so my answers will no doubt help you and many others.
Let’s stay connected.
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