3 Types of Trust for Older Adults Part 2

Trusts can be useful estate planning tools for seniors. There are different types of trusts with different purposes and benefits, and this post will explore the types of trust for older adults.

If you want to learn what trusts are and the differences between revocable and irrevocable trusts, you can check out part one of this series by clicking here.

3 Types of Trust for Older Adults

Living Trust

A living trust is created by the grantor during their lifetime. They can be revocable or irrevocable, but most seniors opt for revocable living trusts because revocable trusts allow the individual more control over the assets. They also allow the grantor more freedom to amend the trust.

The primary purpose of a revocable living trust is to facilitate the transfer of assets to beneficiaries while avoiding probate. With the assets in a trust, they are no longer part of the grantor’s probate estate. This difference makes the transfer of assets more seamless and ensures privacy.

Another advantage of a living trust is that the senior can name a successor trustee. In the event of incapacity, the successor trustee can take over management of the trust, and it ensures a person you trust maintains control.

Testamentary Trust

You can establish a testamentary trust through your will. It is not a living trust since it only becomes effective upon death. Testamentary trusts are always irrevocable, and since their establishment is part of a will, they must go through probate.

The individual outlines their wishes to distribute and manage assets in the trust in their will, along with naming a trustee and the beneficiaries of the trust.

One advantage of testamentary trusts is that they allow you to maintain control over assets during your lifetime, and you can customize these trusts to address various concerns, like ensuring the gradual dispersal of assets over time.

Medicaid Asset Protection Trusts

Medicaid is a form of public health insurance that could benefit low-income seniors. However, the program is means-tested. If your asset levels are too high, you might not qualify. One way to get around this is with a Medicaid Asset Protection Trust.

This type of trust can hold and safeguard your assets to help you qualify for Medicaid. By transferring assets into the trust, seniors can reduce their countable assets. However, the trust only provides this protection if it is irrevocable, so you lose direct control over the assets. However, you can still benefit from the trust’s income and secure your long-term care needs.

Setting up a trust has significant financial and legal implications. Consult an estate planning attorney to learn more about your options.

Safety and Overall Well-Being at Dream Catcher

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Get in touch with our team, and we’ll be happy to answer your questions.

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