How A Castle Trust Can Help You Manage Long-Term Healthcare Costs

We have frequently discussed forming trusts in order to protect your estate from going through probate and allow you to directly pass your assets onto your heirs. But one particular type of trust that you can use – especially if you are concerned about potential nursing home or other healthcare costs at some point – is an easy asset protection trust known as a Castle Trust. This can be especially helpful, given that one of the main reasons that retirement funds do not last as long as couples expect them to is due to unexpected health costs, with the average cost of a room in a nursing home being approximately $8,000 per month.

What Castle Trusts Are & The Benefits They Offer

Castle Trusts are irrevocable trusts that provide you with a significant amount of control as you and your spouse continue to serve as the trustees, manage the assets, and receive income from the trust. At the same time, because you moved your assets into the trust, your estate no longer has them as disposable assets, and this allows you to rely on Medicaid assistance to help pay for long-term health costs, while you also retain the option of receiving income from the trust to help pay for any living costs needed.

Castle Trusts also allow you to control the distribution of where and how your assets are distributed. For example, they can pass directly onto your beneficiaries, or they can be held in trust for their benefit. In addition, because the Secure Act eliminated the ability for many who inherit from IRAs to stretch out their withdrawals (and, as a result, these individuals will have to pay taxes within 10 years of inheriting), a Castle Trust is also beneficial in that it provides a tax-efficient alternative, as well as providing you with the ability to invest in whatever you wish and also providing protection against creditors, lawsuits, and any risks associated with the market. Unlike a traditional revocable living trust, these trusts also allow you to make changes and transfer assets back into your name at any time.

Contact Our Florida Estate Planning Attorneys for Assistance

In order to set up a Castle Trust, you will want to work with an estate planning attorney to make sure that laws such as the Secure Act and the Tax Cuts and Jobs Act are strategically used so as to avoid having to pay significant taxes by taking money out of, for example, an IRA before you place it into the trust. Also keep in mind that the earlier an asset-protection trust is set up, the better position you are in for your retirement and any unexpected costs that might come along. Contact our Orlando estate planning attorneys at Gierach and Gierach, P.A. today to find out how we can help you get started in planning for your future.

Resource:

congress.gov/bill/116th-congress/house-bill/1994

congress.gov/115/bills/hr1/BILLS-115hr1enr.pdf

kiplinger.com/article/retirement/T036-C032-S014-how-can-a-trust-help-you-avoid-nursing-home-costs.html

https://www.gierachlaw.com/the-secure-act-passed-in-the-night-what-this-means-for-your-estate-plan/