An Asset Protection Trust in Pennsylvania helps protect your assets from creditors, lawsuits, and even the costs of long-term medical care. This type of self-settled Trust means you can select yourself or another person as the trustee. You can choose from two types of Asset Protection Trusts: revocable and irrevocable.
This article will educate you on how Asset Protection Trusts work, the benefits it provides you, and how they can help you when applying for Medicaid benefits.
2 Types of Asset Protection Trusts
There are two types of Asset Protection Trust, so you’ll need to determine which one is best for your circumstance. A Revocable Trust allows you to continue making changes and adjustments throughout your life. Whereas an Irrevocable Trust is permanent once you finalize the document, it can no longer be changed.
Read more about Asset Protection Trusts.
Choosing Between a Revocable and an Irrevocable Trust
There are advantages to both types of Trust. Consult with a knowledgeable Estate Planning attorney regarding your situation.
Revocable Trusts
Here are some situations where a Revocable Trust might work well for you.
- Avoiding probate
- Protecting your privacy after your passing
- Ongoing management of your assets, i.e., limiting beneficiary’s number of withdrawals to income
Before selecting a Trust consult with an attorney about your circumstance.
Irrevocable Trusts
Here are some situations where an Irrevocable Trust might work well for you.
- Protecting assets from creditors
- Qualifying for certain government programs, i.e., Medicaid
- Protecting assets against the costs of long-term care
- Minimizing estate taxes
Before selecting a Trust consult with an attorney about your circumstance.
Benefits of an Asset Protection Trust in Pennsylvania
Whether you’re considering a Revocable or Irrevocable Trust in Pennsylvania, there are benefits to both.
- Allows you to distribute your assets to beneficiaries over your lifetime
- Permits you to select successor trustee (in the event your first selection passes before you do)
- Gives your family access to funds to pay for care, emergencies, etc.
- You can add a clause that requires the trustee to have written permission from either a successor trustee or a trust protector before withdrawing money
- Helps your loved ones to avoid Probate fees after you pass
Medicaid and Asset Protection Trusts
If you’re looking for ways to apply to Medicaid to cover long-term medical costs, but your assets might make you ineligible for Medicaid, then Asset Protection Trust might be able to help you. In Pennsylvania, the asset limit for an older adult applying for long-term care Medicaid is between $2,000.00 for the Nursing or Institutionalized Medicaid, Medical Waivers, Home Based and Community Based Services Applicant and $137,400.00 for the Non-Applicant. For a Regular Medicaid, Aged Blind and Disabled Applicant it is $3,000.00.
When you transfer your assets to an Irrevocable Trust, it’s considered a “gift” under the Medicaid rules. It’s important to note that this is a “planning ahead” strategy and works best if it’s doubtful that you’ll need long-term care within the next five years.
The reason it’s a long-term place is that when you apply for Medicaid, if your “gift” is over five years old, you don’t have to include it on your Medicaid application. Whereas, if it’s within the five-year window, you’ll have to include the “gifts” on your Medicaid application.
Contact a Trusted Asset Protection Attorney
Learn why you should work with an Asset Protection attorney in Pittsburgh to develop and set up your Trusts.
Are You Ready to Set up Your Asset Protection Trust?
At Auld Brothers Law Group, we’re a Pittsburgh Estate Planning law firm, and we’re here to help you develop your Asset Protection Trust. Contact us to learn how to secure your estate for future generations.