Raiding my retirement to help parent to CCRC??

[Texas Proud]

I did not read all the comments, but I would ask your parents to take out a loan against the trust....

I would not want to keep my assets from being in the market when they created the problem....


One question is... who gets the remainder of the trust when they pass

[ERD50]

Quote:

Originally Posted by audreyh1 This is sort of blowing my mind. So the parents tied almost all of their money in is irrevocable trust to pass it on to the kids and now don't have the money they need to pay for their long-term housing needs?

Quote:

Originally Posted by albireo13 Pretty much that's it.

Quote:

Originally Posted by jj Where's the original lawyer who set up the irrevocable trust? What do they have to say about this?

Wow. I have only a tiny exposure to this stuff, but the irrevocable trusts I've seen or read about have an exclusion to be able to spend for care of the grantor. But maybe that was eliminated to try to keep funds away from a nursing home? I'd def want to talk to the original lawyer.

This is not directed at the OP, I realize they are in a tough bind and are looking for help, not a lecture (and they may have had nothing to do with this anyhow), but I guess this is a lesson for all of us - be very careful if you try to have your cake and eat it to. In trying to keep funds away from a Nursing Home, they ended up keeping the funds away from themselves.

But since the kids are the beneficiaries, then yes, it seems like the kids ought to do whatever they can to help the parents out. Hope you all get along...


Can the siblings come up with some cash, or take out a loan? Or is this just your share you are talking about? Or maybe just a matter of timing, faster to get one loan than co-ordinate with others?

Good luck.

[ERD50]

Quote:

Originally Posted by Texas Proud I did not read all the comments, but I would ask your parents to take out a loan against the trust.... I would not want to keep my assets from being in the market when they created the problem.... One question is... who gets the remainder of the trust when they pass

Three people have asked "Who is the trustee?", but no answer from OP (unless I missed it). This is critical. The parents may not be able to take out a loan, even if they are trustees, if the trust doesn't allow for it?

-ERD50

[growing_older]

If all the assets are tied up in the trust and the trust prevents using those assets to pay for the CCRC, why would the CCRC accept them? Does the CCRC know that as soon as they are admitted they are planning to apply for Medicaid, since all the assets are already committed to heirs? This sounds like a poorly planned trust or an overly aggressive attempt to manipulate government safety nets.

[albireo13]

My sibling is the trustee. The way the trust is worded, my M&D can use earnings from the trust but not touch the principle.
They can't take out a loan on the assets since they do not own them. The trust does.
It seems very complicated. We hope to hear back from the other lawyer by next week.

[pb4uski]

So if the grantors (your mom & dad), the trustee, and the beneficiaries all agree and sign off on the liquid trust assets being used for the CCRC and the trust is dissolved, who in the world will object? Since the trust will never be used to try to dodge paying for nursing home care, it's as if it never happened. If you're all in agreement and just did it, I'm not sure what the legal peril would be... who would object and sue the trustee?

[bobandsherry]

Wondering why OP's parents created a trust like this to begin with. Advise to speak with a qualified lawyer is only real way to resolve this. Any other advise is worth what OP has paid for it.

[Sarah S]

My parents had similar but we chose not to utilize medicaid and paid for my parents' care. However, I do remember being told by the trust lawyer he had left a tiny string that could undo the trust if needed. I don't know how it worked but it sounded as if it was his standard practice. Definitely get good legal advice from someone who really knows this part of the law.

Good luck

[ncbill]

Quote:

Originally Posted by albireo13 My sibling is the trustee. The way the trust is worded, my M&D can use earnings from the trust but not touch the principle. They can't take out a loan on the assets since they do not own them. The trust does. It seems very complicated. We hope to hear back from the other lawyer by next week.

In that case the only fair way to handle the CCRC fee while leaving the trust intact is to assign its payment proportionately among the children.

So if two children, each pays half of the CCRC fee and waits to get reimbursed via the assets in the trust after the parents die.

[ncbill]

I should also point out that years ago I read posts from a lawyer who pointed out that their state (CT?) passed specific legislation allowing the state to "bust" Medicaid trusts to get access to the underlying assets.

So anyone thinking of taking the route of the OP's parents should carefully discuss it with a qualified attorney, since the trustee might have to domicile any trust outside the state of residence to protect assets from seizure.

[bingybear]

Quote:

Originally Posted by pb4uski So if the grantors (your mom & dad), the trustee, and the beneficiaries all agree and sign off on the liquid trust assets being used for the CCRC and the trust is dissolved, who in the world will object? Since the trust will never be used to try to dodge paying for nursing home care, it's as if it never happened. If you're all in agreement and just did it, I'm not sure what the legal peril would be... who would object and sue the trustee?

I doubt it is that easy. The trust is an entity. I would expect it has its own tax number and files taxes. The parents are a beneficiary, not the owner. They really have no say in what happens with the trust. I think you need to go to court to break/dissolve the trust. This is usually AFAIK is because the trust can't fulfill it's purpose.

You're probably right that no interested party would object if the trustee violated the trust terms and just paid for the parent's LTC. But all risk would be on him.
One would also need to look at tax consequences. This is not like a revocable trust where the owner can pull assets out because they are owned by them.

Now the question could the trust create earning so they had to be distributed? That could make cash flow unless the trust also says it can't be used for LTC.

[pb4uski]

I concede that in theory there is legal risk of the trustee allowing a technical violation of the trust.... but it is along the lines of "If a tree falls in a forest and no one is around to hear it, does it make a sound?".

Would require some reasearch but the downside risk might be negligible if all interested parties sign off on it.

[Sunset]

Can a trust be sold, if the children (beneficiary of the trust) all sign away all benefits of the trust, and the trustee turns over trusteeship to the buyer of the trust. ?
After all the trustee must be able to hand over the reins somehow, what if the trustee died, and the successor died ?

I imagine it as sort of like selling life insurance benefits of a living person, or selling an annuity for cash.

[ERD50]

Quote:

Originally Posted by pb4uski I concede that in theory there is legal risk of the trustee allowing a technical violation of the trust.... but it is along the lines of "If a tree falls in a forest and no one is around to hear it, does it make a sound?". Would require some research but the downside risk might be negligible if all interested parties sign off on it.

That's what I gathered from a little googling.

Especially since it appears the trust was never actually used to protect the assets in any way, simply dissolving it would seem to almost be a non-event (but I am not a lawyer).

I think it would be different if it had been used to say, protect assets against a lawsuit, and then dissolved.

-ERD50

[GrayHare]

Quote:

Originally Posted by pb4uski So if the grantors (your mom & dad), the trustee, and the beneficiaries all agree and sign off on the liquid trust assets being used for the CCRC and the trust is dissolved, who in the world will object? Since the trust will never be used to try to dodge paying for nursing home care, it's as if it never happened. If you're all in agreement and just did it, I'm not sure what the legal peril would be... who would object and sue the trustee?

Good points. If all beneficiaries sign off, I suspect that approach is the solution though it might not happen quickly.

[pb4uski]

The impression that I get is that the OP and his siblings (the trustee) and the parents are the only beneficiaries so it should be a pretty small group as long as everyone agrees.

[Texas Proud]

Quote:

Originally Posted by albireo13 My sibling is the trustee. The way the trust is worded, my M&D can use earnings from the trust but not touch the principle. They can't take out a loan on the assets since they do not own them. The trust does. It seems very complicated. We hope to hear back from the other lawyer by next week.

As someone else has mentioned, there usually is a clause allowing principal to be used in case of health or welfare of your M&D.... I would be surprised if this is not the case...


Next, if it is only income that can be used, then sell everything and invest in REITS and other high dividend instruments.... when I was young and doing taxes there was one trust that was doing this... I had asked the partner why they were invested in these 'horrible' investments and he said to generate current income.... sure, the principal was declining over the years and they had a big cap loss carry forward they would never use, but they did generate an outsized income stream....

[Hermit]

Mom and Dad purposefully impoverished themselves using a very complex strategy so they could give more of their hard earned money to their children probably while only retaining the use of the house and income generated from their other assets. They did this while presumably of sound mind and body. Have they now changed their mind and is it now their wish to use the money they have already given away so they can live more comfortably than what is provided by the state? Are they still of sound mind and body to make such a decision? Do they want to? I guess as I get older I am starting to take the view of the older parents and I would want to make sure these changes are consistent with the parent's wishes.

BTW, if I were in the children's shoes, I would pay the costs that the parents could not afford just for my own peace of mind, but I am in a position where I could do that without jeopardizing my own retirement. I would ask the other siblings to contribute while knowing that all of them would not be in such a position.

[Spock]

Reading between the lines, the parents were anticipating medicaid coming after their assets to reimburse for medicaid paying for their eldercare,
So grant the parents wishes by placing them in a a medicaid facility.

If the beneficiaries of the trust have the financial ability to pay for upgraded facilities while deferring reimbursement until the parents die and the trust is distributed, go for it.

The problem appears to be that they started shopping for a Cadillac (fancy CCRC) when all they originally budgeted a KIA.

[tinlizzy]

Maybe they set up the trust to ensure their children had to care for them in a home setting?