Listen to Lawrence Letter: What happens if we add property into our Irrevocable Trust?

LISTEN TO LAWRENCE LETTER

Dear Clients and Friends,

Thank you for continuing to submit such excellent questions! The answers definitely benefit many people which has been the purpose of this Listen to Lawrence Letter from the very beginning. Let’s keep it going but remember, I can’t do it without you so keep your questions coming.

CLIENT QUESTION:

Dear Lawrence,

My wife and I established an Irrevocable Trust with you on 1/10/2017. We are looking to purchase an additional home in Florida. We will be going in on that purchase with my sister and her daughter. The money that my wife and I will use is not in the trust. My first question is because we will only own 50% of the Florida property can that be entered into our trust? My second question is if we can add it to the trust, will that change the Medicaid look-back date of the entire trust?

MY RESPONSE:

I have covered this topic before, but it is worth returning to because I get this type of question every day. The bottom line is that you can transfer your 50% interest in the Florida property to the trust. This transfer will cause an additional 5-year look-back but will not affect the look-back on the original transfer in 2017. However, if you need long-term care before the second 5-year look-back is over, we will be faced with having to wait out the second look-back and pay privately during that time.

In the past, I did a partial revocation of the trust, taking the second transfer out of the trust while preserving the protection for the first transfer(s). The counties have changed their approach here and have declared that a partial revocation for the second transfer could impact the first transfer. Therefore, you need to make a choice if the risk is worth it or if you should avoid the risk and create a second trust for the Florida property. If you are relatively young and healthy and are retiring to Florida in your 60’s, the risk may be very small.

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