Don't know if this might be of interest to anyone here...

quote:

Property, such as your home, held in an irrevocable trust 'that is not included in the taxable estate at death' will no longer receive a step-up in basis. Here’s why the wording of that is key.

In March, the IRS issued Revenue Ruling 2023-2, which had a substantial impact on estate planning, particularly where an irrevocable trust is involved. In the last decade or so, more families have begun utilizing irrevocable trusts to protect their assets from spend-down in order to qualify for government benefits, such as Medicaid and VA Aid and Attendance.

Lots of explanation from Kiplinger in the article:

https://finance.yahoo.com/news...ldren-094042166.html

My brain would explode if I tried to read this now. You can get around spend down? This is the first time I've heard of it.

We have been investigating irrevocable trusts a bit, but even with the IRS changes, we’re below that million-plus threshold.

A big benefit of an irrevocable trust is that you are constraining what the inheritor can do. That is really important to families that have a child with disabilities, even mild ones that inhibit good money management. If you need a perpetuity for such a child, an irrevocable trust seems the way to go.

Trying to game Medicaid seems odd to me. Medicaid quality care is pretty bad.

If you're well off enough to have "trusts" you are probably well off enough to have purchased some long term care insurance and/or to have the kind of assets that self insure so you can choose the level of care.

Said by someone who has a revocable trust, but nothing of the irrevocable kind.

quote:

Originally posted by Piano*Dad:

Trying to game Medicaid seems odd to me. Medicaid quality care is pretty bad.

There are a number of really good care places around here who will accept Medicaid. The catch is that you need to have gone to live there when you still had considerable assets. As you say, the ones which will accept you after you drain your assets are typically pretty bad.

I've talked about two of the homes I have direct experience dealing with. Lutheran Home has a net worth requirement that's probably equal to five years of care that you're able to pay for on your own; you don't give them any bucks up front. Friendship Village of Schaumburg requires an initial payment.

For both of these, you pay a monthly charge for care, but after you've exhausted your assets, Medicaid kicks in and the facility will not throw you out, no matter what level of care you are at. Between Medicaid, SS and/or any pension you have, plus their own resources, they cover the cost of care.

Financial stability is becoming a crap shoot for these outfits. Even the really good ones are having trouble staying afloat. People are staying home longer and when they do finally go into a care facility they need much higher levels of care. Medicaid reimbursements aren't keeping pace with the increasing cost of care. And the pandemic has thrown a new monkey wrench into the works...

You need new people to move in to keep the cash flow going. FV was unable to do tours to market to prospective clients for an extended period during the pandemic. Their population went down and they are in financial trouble. They filed for Chapter 11 last month. Details here:

https://www.mcknightsseniorliv...crc-into-bankruptcy/

My experience is with people whose spouses predeceased them, which of course makes planning a lot simpler. I can see why people would want to do an irrevocable trust, so if one person needs care, the spouse who doesn't might be able to stay in the marital home and still maintain sufficient assets to do so. That said, we haven't looked into irrevocable trusts either, but I think it's worth taking a closer look.