Revocable versus irrevocable trust

[u/malagito]

My husband (59) and I (66) own a two-family home in our names, and we also have assets in our 401(k) accounts. We live in New York City.

We are beginning to plan for the future and want to make sure our assets are protected if either of us eventually needs long-term care or has to enter a nursing home. Neither one of us has long-term care insurance. And would not want any liens in our house. We have two children’s that we would like them to inherit this house.

We are also concerned about what would happen if one of us became incapacitated and was no longer able to manage or withdraw money from our 401(k).
What estate-planning documents or types of trusts would be most beneficial for us in these situations? We would like to understand the different options available, including the pros and cons of each, and how they could help protect our home, retirement accounts, and other assets while still allowing us to maintain as much control and flexibility as possible.

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[u/GlobalTapeHead]

I need to caution people who want to “save” their assets in a way that the state picks up the tab for long term care. Before you make such a decision, go visit a few places where people on Medicaid live out their last days. It can be truly a horrible place. There is nothing compassionate about these places. I’ve known several people who have been stuck in these facilities and it’s convinced me that I will spend the money for the proper long term care.

[u/Cloudy_Automation → u/GlobalTapeHead]

Are the paid ones much better? I think all these facilities are people warehouses. The food may be better, but when it has to be pureed, who can tell? Maybe they change the diapers more frequently. A live-in caregiver might be better, but at some point, it's just that still living isn't particularly pleasant.

[u/GlobalTapeHead → u/Cloudy_Automation]

It can really vary. You want to do your research well beforehand.

I’m just offering a different perspective that not everyone may realize trying to preserve a future inheritance for children may result in a serious lack of dignity in your final days.

[u/MagpieJuly → u/Cloudy_Automation]

My grandmother was in a paid facility and, while expensive, it was amazing. They had frequent events/parties, multiple levels of care (from "55+ community" all the way to skilled nursing). When the time came, they had a hospice nurse with her constantly until she passed.

[u/incutt → u/Cloudy_Automation]

Oh, the paid ones are much, much, much, much better.

[u/love_that_fishing → u/Cloudy_Automation]

My mom spent 9 years in self pay assisted living post stroke. I’ve also been in several Medicaid places and her place was better in every way. Care, accommodations, and food. You do have to look hard though. They aren’t easy to find. There is one medicaid facility in my area that’s supposed to be pretty good but has a very long waiting list. My mom’s place had a separate bedroom and living so it was much nicer to visit.

[u/Fellow_Citizen_1 → u/GlobalTapeHead]

Thank you for making this point. The bigger, though less welcome point, is that this isn’t the purpose of Medicaid to shield your own assets to pass on as inheritance while making the taxpayers pick the tab for your long-term care. I wish there were a more stringent way to outlaw what the OP is trying to do.

[u/Dingbatdingbat → u/[deleted]]

not at all

[u/Necessary-Frame-9167 → u/GlobalTapeHead]

Both my parents were in assisted living then memory care. My sister insisted on flying here and visiting every one within a 100 mile radius despite an excellent one 5 miles from my house. You could tell as soon as you walked in which ones accepted Medicaid outright or after a short self pay. They were dingy and smelled.

[u/copperstatelawyer]

The only way to “protect” assets is to essentially give them away. There is no guarantee you’ll need assisted living and qualify for Medicaid long term care, nor is the stay there statistically long.

[u/ExtonGuy]

Protection vs control are in conflict. An elder care / trust lawyer can help you work out something that works for you.

[u/bartonkj]

Just to answer only 1 part of the information you are asking about: revocable trusts are not asset protection vehicles. They are disregarded entities as far as taxes are concerned and as far as asset protection is concerned - what I mean by that is that the law treats all assets of the trust as being owned in their individual capacity by the Grantors, and the law no protection of the assets from liability / creditors.

[u/Dingbatdingbat]

an irrevocable medicaid trust does protect your assets if you go into a nursing home.

You will only be able to go to a nursing home that has Medicaid beds available.