Carefull
By Cameron Huddleston
January 23rd, 2023
There’s a good chance that you will need long-term care as you age.
After all, more than half of adults 65 and older need this sort of care when a medical issue leaves them unable to care for themselves, according to the Department of Health and Human Services. That’s why it’s important to plan for this possibility, especially considering that professional long-term care at home or in a facility can be incredibly expensive.
One way to plan financially for long-term care is to create a trust. And, no, a trust isn’t just something the wealthy use to pass on their money from generation to generation. It can be an incredibly useful tool to protect your assets if you become incapacitated and to shield your assets to qualify for certain long-term care benefits.
Carefull family finance expert Cameron Huddleston spoke with elder law attorney Harry Margolis, author of The Baby Boomers Guide to Trusts, about how to use trusts to plan for long-term care. Click below for an edited transcript of their conversation or you can watch the full interview.
Trusts are an estate planning tool. They’re the most useful estate planning tool and often the most misunderstood estate planning tool.
Harry Margolis, Elder Law Attorney
Basically, a trust is its own financial entity, almost like another person. It holds assets, and they’re different personnel involved in a trust. There’s the trustee who runs things. There’s the grant or donor who creates the trust. And there are the beneficiaries for whom all this is done. Sometimes, the same person can be in all three roles.
The trustee must follow the rules of the trust. The trust document says who is the beneficiary, what are the terms under which assets should be held, what are the terms under which income or principal might be distributed to various beneficiaries. The trustee needs to follow that kind of rule book that’s set out in the trust.
The trust is basically a separate financial entity with someone creating it and a trustee managing whatever’s in the trust, whether it’s investments or savings or real estate, for the benefit of beneficiaries.
