When it comes to elder law and estate planning, understanding the different types of trusts for elderly individuals is essential. For many older adults in Ohio, creating a trust is one of the most effective tools for maintaining control, avoiding probate, and ensuring that long-term care planning doesn't wipe out everything you've worked for.

Planning ahead allows you to stay in control while protecting what you've worked for—no matter what the future holds.

Benefits of Setting Up Trusts for Elderly Individuals

A trust is a legal arrangement that allows a third party, called a trustee, to hold and manage assets on behalf of a beneficiary or beneficiaries. While there are many types of trusts, those most relevant to elderly individuals typically include revocable living trusts, irrevocable trusts, and Medicaid asset protection trusts.

Here’s what these trusts can help you accomplish:

• Avoid Probate: Assets held in a properly funded trust pass directly to your beneficiaries without going through the probate process. This saves time, reduces court costs, and keeps your financial affairs private.
• Plan for Incapacity: A trust can include clear instructions for how your assets should be managed if you become unable to handle your own finances. This gives you control over your future and minimizes family conflict.
• Support Medicaid Planning: Certain types of irrevocable trusts can help protect your assets while allowing you to qualify for Medicaid benefits. This can be critical if long-term care becomes necessary.
• Distribute Assets on Your Terms: Unlike a will, which transfers property after death, a trust can distribute assets during your lifetime or in stages after death. This gives you more flexibility.

Common Types of Trusts for Elderly Individuals

Revocable Living Trusts: These trusts allow you to maintain full control of your assets during your lifetime. You can change, amend, or revoke the trust at any time. Once you pass away, the trust becomes irrevocable, and your named successor trustee takes over. This type of trust is useful for avoiding probate and setting up a smooth transition of control if you become incapacitated.

Irrevocable Trusts: These trusts cannot be changed or revoked once established. Because you give up control over the assets placed in the trust, they are no longer considered part of your estate. This can help reduce estate taxes and protect assets from creditors or nursing home costs, depending on how the trust is structured.

Medicaid Asset Protection Trusts: These are a specific type of irrevocable trust designed to shield assets from Medicaid’s spend-down requirements and the five-year lookback period. By transferring certain assets into this trust well in advance of needing care, you may preserve wealth for your family while still qualifying for Medicaid benefits when the time comes.

Key Considerations When Setting Up a Trust

Creating a trust involves more than just filling out paperwork. You need to think through several important details to make sure the trust works as intended.

• Choosing a Trustee: The trustee has a legal obligation to manage the trust assets responsibly. You can name a family member, a trusted friend, or a professional fiduciary. Make sure your trustee understands your wishes and is capable of handling the duties involved.
• Funding the Trust: A trust only controls the assets you put into it. That means you need to retitle property, transfer financial accounts, and update beneficiary designations where appropriate. Unfunded trusts offer little protection.
• Balancing Control and Protection: Some individuals hesitate to use irrevocable trusts because they require giving up control. But in many cases, that trade-off provides important protections. The key is to strike the right balance between flexibility and security.
• Staying Compliant with Medicaid Rules: Medicaid eligibility rules are complex and constantly changing. A misstep can jeopardize your benefits or trigger penalties. If Medicaid planning is one of your goals, you’ll want to work with someone who regularly handles these types of trusts and knows Ohio’s specific requirements.
• Reviewing and Updating: Your needs and circumstances may shift over time. A good estate plan includes periodic reviews to make sure your trust still meets your goals, accounts for changes in the law, and reflects any updates in your life.

Start the Conversation Today

The right trust can protect your assets, ease burdens on your loved ones, and give you peace of mind. At Legacy Law Group, Ltd., we help families across Ohio create estate plans that work in real life, not just on paper.

Need help understanding which type of trust is right for an elderly loved one? Our Ohio elder law attorneys can help you choose the best option to protect your assets and ensure peace of mind. Schedule your consultation today. We’ll help you explore your options and build a plan that reflects your values, priorities, and future.