Setting Up Irrevocable Trusts
Futterman, Lanza & Pasculli, LLP, is one of the most trusted law firms for helping families set up irrevocable living trusts. From our offices in Smithtown and Bay Shore on Long Island, we provide legal counsel for setting up and administering irrevocable trusts, revocable trusts and special needs trusts for individuals and families in Nassau County, Suffolk County and communities throughout the state of New York.
Why Give Up Control Of Wealth?
As the name implies, an irrevocable trust means the grantor voluntarily relinquishes control of all assets placed in the trust, but has the authority to determine under what conditions and to whom the assets may be distributed, or to change the trustee.
Medicaid Qualifying Trust
Medicaid qualifying trusts protect assets if you were to need nursing home care. The trust has a five-year look-back period regarding Medicaid eligibility for a nursing home. It also makes excess resources unavailable if you need care at home, and, unlike nursing home Medicaid, community care is not subject to the five-year look-back period. A Medicaid qualifying trust avoids probate and secures asset preservation for inheritance by the next generation. If five years have expired from the time the trust is executed, the assets in the trust would be considered “unavailable” for nursing home costs, and not preclude Medicaid eligibility.
Income Taxes
If the trust dictates that the income shall be distributed only to the grantor (you), the trust is a grantor trust and the income earned in the trust will not be taxed to the trust, but to the grantor because all of its income will be distributed currently.
Real Estate Tax Exemptions
If the trust expressly states that the grantor has the use of real property, all real estate tax exemptions will be preserved. These may include veterans tax exemptions, senior citizen exemptions and other state programs, such as the STAR program in New York state.
Step-Up In Basis
Since the assets are included in the estate of the grantor, the estate gets a step-up in basis for the trust’s assets to the fair market value of the assets on the date of the grantor’s death. Also, if the home is sold during the grantor’s lifetime, the personal capital gains exclusion is applies. The trustee can buy another residence for the grantor if the grantor so desires, or the proceeds of any sale owned by the trust can be invested to produce income for the grantor.
Probate
Trusts avoid probate and make the process of accessing and distributing an estate easier. If property is in the owner’s name only, the probate of the last will and testament is required before an executor can act on behalf of the estate. If property is owned by the trust, the trustee may act upon the grantor’s death without court intervention.
Contact Us To Speak With An Experienced Long Island Lawyer
If you are considering Medicaid planning or estate planning, let us show you the benefits of establishing an irrevocable trust. Call our attorneys at 631-894-4730 or contact our offices by email to schedule an initial consultation.