Ever thought about what happens when you're no longer competent to make decisions or handle your financial affairs? Join us as Estate Planning and Elder Law Attorneys Greg McIntyre and Brenton Begley unravel the complexities of estate and elder law planning, highlighting the importance of legal documents like general durable power of attorney, healthcare power of attorney, living will, and will. We shed light on the high stakes of not having these documents in place, such as the complications and restrictions of guardianship proceedings.
Navigating the intricate world of wills and deed protection can be a daunting task, but we've got you covered. Learn more about how an executor plays a critical role in the probate process and what pitfalls they may face. Greg and Brenton help us consider the potential financial risks, especially those related to long-term care costs and the possible claim of creditors on your assets. Moreover, we discuss the protective role a will plays in this context and the serious consequences of mistakes during the probate process.
And what about trusts? We conclude by focusing on the role of trusts and their potential for asset protection. Discover how trusts can serve as a secure repository for your assets, bypassing the probate process and ensuring a smoother transition for your loved ones. We compare revocable and irrevocable trusts, and how they can affect your long-term care benefits. And finally, let's explore how a trust can facilitate tax planning, long-term care planning, and leaving a legacy for generations to come. Don't miss this insightful episode, packed with practical knowledge to navigate the intricate world of estate and elder law planning.
Ever thought about what happens when you're no longer competent to make decisions or handle your financial affairs? Join us as Estate Planning and Elder Law Attorneys Greg McIntyre and Brenton Begley unravel the complexities of estate and elder law planning, highlighting the importance of legal documents like general durable power of attorney, healthcare power of attorney, living will, and will. We shed light on the high stakes of not having these documents in place, such as the complications and restrictions of guardianship proceedings.
Navigating the intricate world of wills and deed protection can be a daunting task, but we've got you covered. Learn more about how an executor plays a critical role in the probate process and what pitfalls they may face. Greg and Brenton help us consider the potential financial risks, especially those related to long-term care costs and the possible claim of creditors on your assets. Moreover, we discuss the protective role a will plays in this context and the serious consequences of mistakes during the probate process.
And what about trusts? We conclude by focusing on the role of trusts and their potential for asset protection. Discover how trusts can serve as a secure repository for your assets, bypassing the probate process and ensuring a smoother transition for your loved ones. We compare revocable and irrevocable trusts, and how they can affect your long-term care benefits. And finally, let's explore how a trust can facilitate tax planning, long-term care planning, and leaving a legacy for generations to come. Don't miss this insightful episode, packed with practical knowledge to navigate the intricate world of estate and elder law planning.
Hi, I'm Greg McIntyre, a state planning and elder law attorney, here with Attorney Brenton Begley. And we are going to present a masterclass on a state planning and elder law so we can inspire you to protect your hard-earned money and property. The first thing we're going to talk about is foundational planning. Then we're going to talk about deprotection, then roll into trust and explaining trust. So let's start Brenton. We'll start with foundation. Foundations are general durable power of attorney, healthcare power of attorney, living will and will. What is a general durable power of attorney?
Speaker 2:So a general, durable power of attorney is a document that allows you to name somebody to act on your behalf as if they were you for legal and financial purposes. So imagine, greg, if something were to happen God forbid you were to become incompetent and capacitated, unable to act on your own behalf. The question is what happens next? That's where you're the most vulnerable. If you think about protection, what we try to do as a state planning elder law attorneys we want to protect you when you're your most vulnerable. You're most vulnerable if you have no ability to act on your own behalf because of incompetency or incapacity. So you need somebody appointed legally to be able to act on your behalf, as if they were you, to make these very important legal and financial decisions like qualifying for benefits to pay for long-term care, setting up protection for assets and ensuring that your wishes are carried out.
Speaker 1:Would my assets be frozen if I became incompetent or incapacitated because of accident, illness or injury, if I hadn't, say, given my wife or my child an agency under a general, durable power of attorney to be able to act for me for financial and legal purposes?
Speaker 2:Certainly it can result in freezing of assets and it's important to talk about what assets can be just locked up, because a lot of people think, hey, I'm married, I don't need a power of attorney. I have a spouse, they can act on my behalf. But if you have an individual retirement account keyword being individual no one else can access that account on your behalf. They can't get money out of that account to pay for care. They can't utilize that account and protect it. Real property is the same thing. If you're married in North Carolina, even if the property is in just one spouse's name, the other one has marital interest in that property, cannot transfer or otherwise protect that property without that person's signature. If they're incompetent and capacitated, they can't sign. You've got to have a power of attorney.
Speaker 1:So what if I become incompetent or incapacitated? I haven't done a general, durable power of attorney, the first foundational document. What is the option that my wife, my children, what can they do to access my assets and to pay for my care?
Speaker 2:Yeah, it's a good question. Unfortunately, they would have to resort to some type of guardianship. So that's a court initiated proceeding where they have to tell the court we think this person is incompetent and capacitated. They cannot act on their own behalf. Therefore, we're asking the court to take the rights away and appoint somebody on their behalf to make decisions for them. And that's one of those extreme situations that you don't want to be in, because as an attorney, I want to make sure that people retain their rights, even if they have diminished capacity, and prevent from having those rights taken away where they can choose for themselves. And the danger in that is that a family member might not be appointed as guardian. You could have a third party, maybe an attorney, you don't know, maybe the Department of Health and Human Services, and there's a lot of risk and unknown there. So you want to avoid that if at all possible.
Speaker 1:Sure, I can be proactive and do a general durable power of attorney and avoid a guardianship where a court would appoint a power of attorney and I can choose who I want to be my agent and act for me with a general durable power of attorney, but I don't have a choice in the court proceeding. Is that right?
Speaker 2:That's right, but unfortunately, if it does happen, if you do have to resort to a guardianship for whatever reason, that is a power of attorney in place. Thankfully, the person named as power of attorney has priority over any other third party to be your guardian and act on your behalf.
Speaker 1:So it's a safeguard. Even if someone brought a guardianship proceeding for me, that's right. Okay, that the person I want to act for me is going to act, that's correct. That is phenomenal. The second foundational document is a healthcare power of attorney. Deceptively named, it actually appoints an agent to handle your healthcare issues. All right, that's only when I can't act for myself. It's my choice. What happens with my healthcare until I'm not able to make that choice because of incompetency or incapacity? Right? And then who do I want to step in as me and make the right healthcare decisions in an emergency situation, in a long-term care placement situation, whether I need surgery, medication, any decisions.
Speaker 1:I'm a huge proponent of and fan of putting a HIPAA authorization built in within the healthcare power of attorney, right, okay, that way they can also pull my medical records to see you know what's going on in the medical records, to get a second opinion, to find out why an aspirin costs $500. You know, there could be many reasons why you would want them to do that, but that's also an important component, I think. And then in North Carolina, a healthcare power of attorney the agent can also be designated to handle burial, right, and you can designate. That's where you really designate. We see attorneys put that in wills traditionally, but the will really isn't probated for, say, 30 days after someone's passed away. I don't think I'd be in good shape for 30 days unless I was on ice. So you really want to contemplate that in the healthcare power of attorney, right.
Speaker 1:And then we want to make sure that we're on a good, healthy, healthy health care. We want to make sure we decide whether we want our healthcare agent to handle mental healthcare, because that's a separate statute in the state, right. And if you don't include the mental healthcare portion and reference that statute, then you're left with not being able to really manage the whole person and especially as we age you know Alzheimer's, dementia it really blurs the line between physical and mental healthcare. Things are complex documents but they allow you to appoint an individual that you want to handle your care. Now, in a general, durable power of attorney for for financial and legal matters, or a healthcare power of attorney for healthcare and you know, any kind of healthcare issue, would it be smart for me to have a successor, somebody waiting in the wings in case the primary agent I appointed could not perform that duty?
Speaker 2:Yeah, absolutely. Just like any sports team needs to have a deep bench, you need to have backups. Thing is, though, it's not a popularity contest. You want to pick somebody especially if you're naming them to control finances, legal rights that's sophisticated enough to make those decisions on your behalf. If they can't balance their own checkbook, they shouldn't be making your decisions. They should also be sophisticated enough and know your wishes and be have the wherewithal to ask, maybe a professional, even if you're not able to communicate, to ascertain what the decision that would be in your best interest is.
Speaker 2:Now, one thing that I see a lot questions that I see a lot from clients asking about healthcare power of attorney is day to day. I can see a need for that. Day to day Taking my loved one to the doctor, maybe picking up prescriptions, but what's the big picture reason for a healthcare power of attorney? Can it help someone obtain benefits to pay for long-term care? Is it necessary to have a healthcare power of attorney if a loved one's trying to get someone something like Medicaid, va to pay for long-term care?
Speaker 1:Yeah, so you will get stopped really at the gate at the beginning if you do not have in place a general durable power of attorney and healthcare power of attorney when you're going to apply for benefits. And then we have to shift the guardianship and which is much more costly, it's a lengthier process, it's a court process. If family members don't agree. Many times the default is again, like you said, to appoint a third party. So you might end up with a guardian that you don't want and court oversight over every dollar that's spent. So you know, should we really trust the person that we're appointing as the agent under a general durable power of attorney or healthcare power of attorney?
Speaker 2:Certainly, you know, one of the things that we do as state planning elder law attorneys is, whenever we're setting up an estate plan, we're ensuring that there are, you know, fail safes in place, meaning that if you put someone in a trusted position what we, you know, call a fiduciary position that's a legal term for it you want to make sure that you know they, if they were to violate their duty under the power of attorney, that they could be you know how liable for that. There's some recourse there. But that doesn't mean that you shouldn't pick somebody that you trust unequivocally, someone that you know can do the job, someone that you know has your best interest at heart. That's very important, absolutely.
Speaker 1:So what about a living will? Now I get confused, because there's the last will in Testament and there's the living will. What is a living will?
Speaker 2:Sure. So living will is your declaration for your desire to die on natural death. So you're saying, look, if I'm terminal, I'm, you know, incurable, I'm past the point of no return, it's okay to go ahead and let me go, because I don't want to live in some type of, you know, persistent vegetative state. And this is an important note. A lot of people get this mixed up with a DNR. A DNR is very different.
Speaker 2:An attorney doesn't draft a do not resuscitate. That's a legal, a medical classification that you request, you know, from a medical facility, saying don't take any type of extraordinary means to bring me back to life, to resuscitate me, whereas a living will is saying look, do your best, Try to bring me back, but if it's confirmed that I'm just, you know, brain dead lights are on but nobody's home you can go ahead and let me go. Now, why would someone want a living will? Why is this something that someone would request? Personal reasons, number one. Maybe you don't want to imagine yourself languishing in that position. Another thing is, though, that it's important to understand that North Carolina spouses inherit medical debt, right.
Speaker 1:So personally and that's right.
Speaker 2:They personally inherit medical debt under the doctrine of necessaries, unlike other debt. So if I rack up a bunch of credit card debt in just my name, my spouse is not going to inherit that. But if I, you know, develop some type of debilitating illness and I have to go to the hospital, have to, you know, rack up a bunch of bills, medical bills, she will inherit that. So it's important to understand that if you don't have a living will, you could be in a position where you know you're not able to express your own wishes and you could be racking up medical bills because someone has to make the decision. A loved one would have to make that decision.
Speaker 2:It's a hard decision to make. It takes time to make the decision as to whether or not to take somebody off life support. The longer it takes, the longer you know you're racking up that medical debt. So not only do you get to express your wishes so you absolve somebody else of having to make that really hard decision you also get to practically avoid unnecessary debt being inherited by your loved ones. Now, with respect to a living will, another important part is and I'll ask you this have you ever seen any type of issue with a family where a loved one has had to make that very hard decision, maybe as healthcare power of attorney, and it's caused an issue in the family.
Speaker 1:It caused this controversy. Sometimes I had an aunt who languished for probably 11 years because her siblings couldn't agree and my father was really left to care for my aunt and be the primary decision maker. But everybody couldn't agree and in that situation it puts the person that needs either care or might want to be let go in a really tough situation. It puts my dad, put the whole family, you know, and they just could not reach a decision right. So you can clarify that and avoid controversy. I can't think of anything that is a document of greater responsibility, personal responsibility, than deciding if I'm in a terminal, persistent vegetative state, if the only medical procedures that can be done are going to prolong my suffering, me saying it's okay to let me go in that situation, right, and it can save, you know, my daughters, for example. I think that is a decision that would stick with them to have to unplug that right. Yeah, I can help them with that decision if I'm ever in that situation.
Speaker 2:Yeah, and a lot of folks think they can make that decision and they probably can, but you really don't want. You would love that guidance Sure.
Speaker 1:Let me ask you this Sure If I have specific religious concerns, that I want certain rituals or religious ceremonies performed prior to being let go, is that something that I would put in a living will?
Speaker 2:Absolutely. That's something we routinely do for people with those convictions. We put whatever language is necessary in the living will to make sure those things are performed prior to the actual removing the person from life support.
Speaker 1:Sure, that's phenomenal, phenomenal. Thank you, brent, appreciate that. So now you've clarified for me the difference between the living will and now we can go into the last will and testament. That's right. Your living will does not pass property or title to assets. Your last will and testament does so. The last will and testament appoints an executor, which is the person that is responsible for overseeing the transfer of assets through the probate estate. I've heard people many times say hey, I have a will, so therefore I don't have to go through probate. That is exactly the opposite and people have that misconception sometimes.
Speaker 1:Probate is the process by which a last will and testament passes your assets. It is a court process and I would say minimum six months or longer. We have some probate estates that run much longer. It just depends on the complexity of the estate. Last will and testaments also direct how the money or real estate or vehicles or any asset that has to change title other than a beneficiary asset through probate. It says who's going to get what and what percentages or dollar amounts. So it really allows you to control your assets as they flow through the will.
Speaker 1:But then, when we're looking at an estate plan or when you're considering an estate plan. Ask yourself this question is a last will and testament the right place to pass my assets? Is it the best place? Because in North Carolina, the only place that a claim from a creditor can attach is during the probate process, when the last will and testament is passing your assets. So if there is a danger of a long-term care event, which right now averages you know the numbers are all over the place. The highest I've seen recently is 17,000 a month.
Speaker 2:Okay.
Speaker 1:I mean, you know you think about multiple years of that and it could spend down even a larger state. So if you're in that situation a spouse is in that situation, or that might be something that would happen in the near future and I would ask you what percentage of people over 65, according to a US Department of Health and Human Services study done in 2005, are going to need some type of long-term care in-home assisted living or nursing home?
Speaker 2:care yeah. So the answer is 70% of individuals who make it past the age of 65.
Speaker 1:70%. That's why this is so important. Yep, right, 70%. That's a you know a great, you know a large chance, right? A more chance than not that someone over 65 right now will need long-term care and the cost can be exorbitant. Therefore, we want to avoid some, in certain situations, using the will as a primary place to pass assets. We might want to look at the last will and testament like an insurance policy right that if something failed, then we have it there to kick that asset over to a trust or make sure it gets to the right person.
Speaker 2:Right, the will should be thought of as a last line of defense. You know the thing that you rely on.
Speaker 1:you know that's like a safety net that ensures Last line of defense.
Speaker 2:Yeah, and you know a lot of people think about the will, just like you said, as something that helps you avoid probate. A will is just a guide through the probate process. That's really what a will is and you know you do name an executor. It's important to know that if you name an executor, that person is not the executor until they're nominated by the court.
Speaker 1:They have to qualify as the executor.
Speaker 2:That's right, and they have to take an oath and everything would be appointed by the court to be the executor. So, if you think about a will think about probate, think about the probate court, think about the probate court taking jurisdiction over all of the assets and requiring your executor to go through an extensive accounting process to, you know, navigate a complicated legal system and giving the chance of any creditor who wants to make a claim against your assets to be able to do so within, you know, a 90 day period.
Speaker 1:And here's the Including healthcare claims or long term care Medicaid claims, If they've had to come in and pay for nursing home.
Speaker 2:Oh, trust me, I hear a lot of folks saying I don't have any creditors, I pay my bills. Why should I worry about creditors? Most people incur debt that, could you know, saddle their estate right before they pass away. So we're talking about the medical debt that you incur right before you pass away with this hospital debt, likely long term care debt, though, whether it's in home, assisted living or skilled nursing care.
Speaker 1:And what about being under the contempt power of the court? Yeah, if you're an executor, you have If you're late moving an asset around, or you're dealing with a stock company, or you know some entity that's not responding right yeah.
Speaker 2:Yeah, let's say I'm an executor. I'm, you know, probating an estate. Someone name me the executor. I was appointed by the court and I'm trying to do my best. It's complicated. The will is a legal document. Maybe I have trouble interpreting it, maybe I'm having trouble understanding the. You know, just navigating the process. If I mess up, I can be held in contempt by the court. They can put me in jail for messing up.
Speaker 1:That's right. That's the seriousness of the probate process.
Speaker 2:Right, even if I'm the only heir too, by the way.
Speaker 1:Yeah, yeah, that's tough, it's tough. That's a great summary of foundational work General, durable power of attorney, health care, power of attorney, living wills and wills. This next part we're getting ready to go into is deed protection often overlooked and underestimated, but very, very powerful. So let's talk about deed protection. I'm at an age where I feel like I need to transfer. I hear this question every once in a while. Yeah, you know what age? Should I transfer my house into my children's names? I don't like that, because it means someone wants to give away their house while they're alive because of a system of the high cost of nursing home care or, you know, of some kind of fear that the governmental benefit is going to come in and take the house when they pass away. Sure, only if it passes through the will, by the way.
Speaker 2:Yeah.
Speaker 1:Okay and and I just don't like that system. It doesn't sit well to me and it doesn't have to be that way. There are many ways to protect the house and other real estate Right, and one way is deed protection. Okay, so another danger of transferring the house directly into your kids' names is you know, if I paid $5,000 for that house when I came out of World War II WW II, right and? And now that house is worth $500,000, which is totally possible with real estate Right Then I've given my children or child, if they sell the house, a capital gains tax bill that would be valued or derived from the cost basis in that property $5,000 versus the sales price of $500,000.
Speaker 1:Right, so that is $495,000. That capital gains tax would be levied on on that gain. And you can avoid that by passing the property through some type of active inheritance, which could be through a will, deed, transfer it, death or trust. You can also avoid in some deeds right, you can avoid probate right so you could use own it to your die and then maybe your spouse you know, husband and wife owns it till they die or a single person and then pass it on to say the children at my death. How would I do that?
Speaker 2:Yeah, so you know, thinking about the goal of avoiding probate to avoid creditors coming after the property, avoiding a long-term care bill going after the house, you know I get why people might want to transfer ownership interest in their house to a third party, another person, like a….
Speaker 1:Plus, I don't own the house anymore. I mean you know if my daughter gets mad at me, right?
Speaker 2:Or their spouse. You might have raised your child correctly but you hopefully didn't raise their spouse right. So Lord knows what that person may want to do. And again, you know with spouses, they have marital interest in property. So if you transferred it to a child, their spouse has marital interest in that property. So, dangerous thing If they get sued, go bankrupt, get divorced or God forbid pass away, there goes the house, right.
Speaker 2:So we want to prevent that from happening. What we want to do is we want to keep you in control of the property. That's one of the goals, right? So if we're doing an estate plan for you, we don't want you giving up control over your money or property. Okay, we want protection and control. So if we are going to set up something right, ideally we would have the property in your name, under your control for the rest of your life and then be able to avoid probate, where the property passes automatically to a child, the loved one, whoever you want to leave it to one or multiple people and avoid that dangerous probate process without having to give up some type of you know ownership interest in the property.
Speaker 1:Do you like?
Speaker 2:that that's a ladybird deed. Okay, Yep, that's what we refer to as a ladybird deed. That's the nickname. Now it's also known as an enhanced life estate deed, meaning that you're saying this is my property for the rest of my life and it's not going to anyone until me and my spouse both die, okay, and then it automatically avoids probate, goes to whoever I want to leave it to again, one or multiple people.
Speaker 1:That is phenomenal, so that's a tool to protect the house. I heard that there's this look back period five years for long-term care Medicaid.
Speaker 2:Yeah.
Speaker 1:So I got to make transfers outside of that to qualify for long-term care Medicaid. Would this violate that look back rule?
Speaker 2:So another reason, another reason why you don't want to just give away ownership interest in the property is you're triggering a look back period for possible benefits, whether it's Medicaid or VA. So it's three years for VA, three years for assisted living level Medicaid and five years for skilled nursing level care. That means that there's a window that DSS or the Veterans Affairs looks at to determine whether or not you've given away an asset to help you qualify for benefits to pay for long-term care. And if you have, they can penalize you, they can deny your benefits for long-term care. So you want to be very careful about just transferring ownership.
Speaker 2:So the question is does something like a ladybird deed, you know, trigger that look back period? And the answer is no, and the reason why is because you're not giving up any interest in the property. You keep all interest in the property. That's the beauty of the deed. Now it's not available everywhere, but we like to utilize it here in the state of North Carolina because we do have it available here and so we are happy to ensure that property is protected. Especially you know your primary residence with that tool.
Speaker 1:Absolutely. Well, that's phenomenal, ladybird deed. Phenomenal tool to protect the home. Amazing tool to protect the home and still qualify for the benefit and not run afoul of that look back period. That's phenomenal. So let's move on to trust. We get a lot of questions about trust. We do a lot of trust drafting, okay. So let's talk about trust today. Yeah, what is a revocable living trust? We'll talk about revocable living trust, irrevocable trust, and then can we have the best of both worlds? We'll call that a convertible trust, okay, right. And we draft a ton of different types of trust. Those are three, right?
Speaker 2:So let me set the stage here just a little bit before we get into trust. A goal that we have again is not for you to give up control. Okay, because if I just gave my house to a child, I have no recourse, whereas if I name somebody as power of attorney, they might have the power to act on my behalf, but there's recourse there. They have a fiduciary duty. Okay, and remember that when we start talking about trustees. Okay, but the question is what is a revocable living trust? Well, what is a trust?
Speaker 2:In general, a trust is a pot where you can put anything that you own. So think of it as you're creating this legal entity, this pot, and it can hold anything that you own, and anything that you own that's in that pot avoids probate. That means that it passes immediately to a loved one. Whoever you name is a beneficiary.
Speaker 2:Now you know people are confused about the interplay between a trust and a will. A will can leave things to a trust as an heir okay, but other than that, the will and the trust are totally separate and apart. The trust controls only what's in it and the or what's being left to it, and the trust can have terms of distribution, just like a will. So if I want to leave, you know, 80% of my trust estate to you, know, bob, I can do that. If I want to leave 20% to Sally, I can do that right, just like you can in a will.
Speaker 2:So in a revocable living trust, that's a trust that I set up, where I am the creator of the trust, also known as a grantor, set law and I have total power and dominion over the trust and its assets, right. So think of creating a company, and I founded it. I'm the president and CEO, I control the thing right. Same thing with a revocable trust I can take things out, put things in as I wish, I can change it and I have total power over it. So that's a revocable living trust.
Speaker 1:And the trust things that are in the trust in a revocable living trust. They do not go through probate, correct?
Speaker 2:Right Pass immediately to a loved one upon your death.
Speaker 1:Okay, and are things that I place in a revocable living trust? Is that protecting my assets if I need a long-term care benefit to pay for long-term care?
Speaker 2:So if we talk about protection, one of the questions is does the asset that you own, that you have in your name or in your trust name, count as an asset against you if you're trying to qualify for much needed benefits to pay for long-term care? And the answer is anything that's in a revocable trust still counts as yours because you can have all the power and control over it Because I've got my hand in that cookie jar.
Speaker 1:Yeah, exactly, I can take a cookie out and put cookie.
Speaker 2:Those are your cookies, right.
Speaker 1:So the government, they count that as my asset.
Speaker 2:That's right, that's right, and as they should. Yeah, as they should. Yeah, it makes sense. You have all control over it Right, whereas in an irrevocable trust.
Speaker 1:Right, let's say a Medicaid asset protection trust, a highly specialized trust right.
Speaker 2:Right.
Speaker 1:Or any? How about a basic, irrevocable trust and we do draft a lot of Medicaid asset protection trust, right? Right, that would mean you were the set law, the trust maker, the grantor. The same thing, right, you made the trust, but you can't be the trustee if you want to fully protect it from that long-term care situation. You know your spouse yeah, that's correct. So, you know your spouse, and. But you know what? I can still draw income. I can be the lifetime income beneficiary.
Speaker 2:Yeah.
Speaker 1:If I have investments, rental properties, that income can still flow to me. Right, that's what I can still take.
Speaker 2:And I get to pick who's trustee other than me, other than my spouse, so it could be a child of mine, my son yeah, it was the trustee, right, and my son might be the other lifetime income beneficiary, right.
Speaker 1:So that if I need a benefit like long-term care Medicaid, the trustee my son can cut off that income to me and so income doesn't build in the up in the trust and tax at the trust tax rate can still flow that income to my son at that point, so that income isn't counted as my income to pay for long-term care. That's right, which is helpful, very helpful to get me under an income limit for the benefit.
Speaker 2:Right, and there are some hesitations sometimes with folks in Irrevocable Trust, because, again, you know, a lot of people don't want to give up control. What's kind of funny, though, is we I noticed that some people are willing to kind of transfer the house, but, you know, kind of have some trepidation to do an Irrevocable Trust. And it should be the opposite, because here's the thing that you're doing You're appointing somebody as a trustee. They're in a trusted position, they have a fiduciary duty. They have to act in your best interest and the best interest of the trust. Here's the other thing. If I were to tell you Greg hey, I'm gonna start a game with you, we're gonna play a game. I create all the rules of the game beforehand. Okay, I can't change the rules once we start playing, but I get to, you know, set up all the rules beforehand. How much control over that game do I have?
Speaker 1:I have the ultimate control because I set the rules of the game and the only thing the trustee does is has to abide by my rules. They cannot go outside of those rules.
Speaker 2:They have a legal fiduciary duty preventing them from going outside the rules and despite you know, that protection, that measure of control you still might have in an irrevocable trust. It might not be time for everyone to have an irrevocable trust in place and sometimes, even though it may be time, folks don't want to give up that control right. No matter how much you know information we can give them, no matter how much you know solace we can bring with respect to how it works, sometimes they don't want to give up control. So, you know, is there a middle ground that we can reach here for or folks?
Speaker 1:I think so. What if I had a? What if I could start off with a revocable living trust and then, anytime I wanted to flip a switch to make that trust irrevocable and activate those Medicaid asset protection trust elements? Right, so I could have one trust and I could have it convert to be irrevocable if it was threatened, if the assets were threatened, if I was in a situation where I might need long-term care.
Speaker 2:Yeah. So what I'm imagining when you're telling me this is like a bank vault that's open, where you can go in and get your money, that sort of thing, and then if the bank robbers try to come in, steal the money out of there, the vault door shuts. You turn the big whatever that thing's called like a knob and then, yeah, you spin the thing and then it's locked right. So I'm imagining that. Is that how that trust? Is that how that?
Speaker 1:works. That's how a convertible trust works.
Speaker 2:Yes, absolutely. Can you still get money out of it? Is it like just that, your revocable trust that we talked about?
Speaker 1:Exactly the same. You can be the lifetime income beneficiary and the other beneficiaries can pull principal out if they need to, for, say, mom or dad, for anything they need.
Speaker 2:Right Now. I get this question all the time If there's money or property in a trust let's just say real property in a revocable or irrevocable trust can we still sell that?
Speaker 1:You can sell it and the beauty of having in an irrevocable trust status is that if I sell the property, I have the flexibility of selling the property and the money and the check from the closing is cut to the trust. So it goes in a trust account that you open at the bank. Right, that might be investments that I get income off of, so that money is does not become unprotected when it's converted from real property to cash.
Speaker 2:Perfect.
Speaker 1:Right. So wonderful planning tools Trust, avoid probate. They can be used to protect assets to avoid long-term care claims and are great in long-term care planning as well as tax planning right, Increasing the taxable exemption of the estate and death tax Right.
Speaker 2:Deferring tax.
Speaker 1:Deferring tax. There's many really cool things that you can do. With a trust. You can really write your own story well beyond your death, even right. So, in summary, this has been the masterclass the McIntyre Elder Law masterclass on estate planning. Thank you for attending, thank you for joining us. Because you took the masterclass, I would like to offer a free consult to sit down with an attorney and review your estate plan and talk about what tools and estate planning would be right for you. You can take advantage of that free consult by going to mclderlawcom that's MSMIke CSNCharlie elderlawcom or calling 1-888-999-6600. And thank you so much for joining us today.