• Raphan Law: Blog

WHY IRREVOCABLE TRUSTS VS OUTRIGHT GIFTING




So, why complicate things with a trust? Why not just keep the planning as simple and inexpensive as possible?

The short answer is that gift transaction costs are only part of what needs to be considered. Many important benefits that can result from gifting in trust are forfeited by outright gifting. These benefits are what give value to using irrevocable trusts in Medicaid planning.


Key benefits of gifting in trust are:

  1. -Asset protection from future creditors of beneficiaries. Preservation of the exclusion of capital gain upon sale of the Settlors’ principal residence (the Settlor is the person making the trust).

  2. -Preservation of step-up of basis upon death of the trust Settlors o Ability to select whether the Settlors or the beneficiaries of the trust will be taxable as to trust income.

  3. -Ability to design who will receive the net distributable income generated in the trust.

  4. -Ability to make assets in the trust non-countable in regard to the beneficiaries’ eligibility for means-based governmental benefits, such as Medicaid and Supplemental Security Income (SSI).

  5. -Ability to specify certain terms and incentives for beneficiaries’ use of trust assets.

  6. -Ability to decide (through the settlors’ other estate planning documents) which beneficiaries will receive what share, if any, of remaining trust assets after the settlers die.

  7. -Ability to determine who will receive any trust assets after the deaths of the initial beneficiaries.

  8. -Possible avoidance of need to file a federal gift tax return due to asset transfer to the trust.


If you have questions about any of the above items, please call me, Brian A. Raphan, Esq at 212-268-8200 or 800-278-2960. There are additional measures available and your individual situation should be assessed before making any financial decision.

#trusts #estateplanning #eldercareeldernycaarp #irrevocabletrusts #medicaidplanning #gifting #medicaid #trusts

MEMBER:

•National Academy of Elder Law Attorneys

•American Bar Association

•New York State Bar Association

•United States District Court New York Southern District • USDC NY Eastern District

•State of New York Unified Court System

•National Alliance of Trust & Estate Professionals

•Temple University • Cardozo Law School NY

•AARP Listed Attorney

The information on this site is not, nor is it intended to be legal advice and does not automatically create an attorney/client relationship.  On negligence and medical malpractice cases we may participate or partner with other counsel with disclosure to potential client before we or such partnering counsel accept the case.           © 2020 Brian A. Raphan, P.C.

RAPHAN LAW

7 Penn Plaza, 8th floor

(370 7th Avenue)

(7th Ave/31st St.)

New York, NY 10001

 

Tel: 212-268-8200

Fax: 212-244-3075
info@RaphanLaw.com

Twitter.com/NYCelderlawfirm

 

Elder Law News Blog