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Old 11-17-2017, 02:53 PM   #21
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After watching her DM and Aunt both deplete their assets in a CCRC and living to 100 years, my DM inquired about these trusts. When it was explained that this money would not go to the greedy nursing homes and not deplete her assets she simply replied " That's just wrong. I've always been taught you pay your bills".

Admirable on her part, but I'm guessing she'll be moving in with us at some point.
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Old 11-17-2017, 03:00 PM   #22
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I would definitely speak with the CCRC as soon as possible. I would bet they have familiarity with this situation or similar and might help arrange a bridge loan until the house is sold.
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Old 11-17-2017, 03:19 PM   #23
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I don't believe you can take loans from an IRA in the same way that you can from a 401k. The best would be using the money temporarily while making a 60 day transfer, but this would be risky as if it didn't all work out you would have to pay incomes taxes on the whole balance removed.

https://www.thebalance.com/ira-loan-options-315561
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Old 11-17-2017, 03:25 PM   #24
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I don't believe you can take loans from an IRA in the same way that you can from a 401k. The best would be using the money temporarily while making a 60 day transfer, but this would be risky as if it didn't all work out you would have to pay incomes taxes on the whole balance removed.

https://www.thebalance.com/ira-loan-options-315561
+1 you can't borrow money from your IRA other than the 60 day transfer provision. If you can't replace the money in 60 days then it is a taxable event and if you are under 59 1/2 you incur the 10% penalty as well.

You might be able to borrow on your house. I doubt that the parents could borrow on their house since it is in the irrevocable trust.
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Old 11-17-2017, 03:55 PM   #25
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who is the trustee of the irrevocable trust?

if the trust document is reasonably well-written, you should be able to carefully read the document to find out what the trustee's options are regarding the trust assets - no need to depend upon a lawyer, although getting an opinion can't hurt

if you (and siblings, if any) are beneficiaries of the trust, the trustee may be able to distribute assets to you. You, in turn, can gift those assets back to your parents. Yes, you'll have to file a gift tax return, but no tax should be due unless you're throwing around a boatload of money.

your parents should have filed a gift tax return when they gifted assets to their irrevocable trust. You do have a copy of this, right?

Disclaimer: I'm not a pro so these comments are worth what you paid for them.
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Old 11-17-2017, 04:12 PM   #26
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This thread is very valuable as I had always heard of trusts, and know some relatives that have property in a trust.
It has seemed like an estate planning or protection instrument.
But I've been too cheap to consider getting one.

Besides the good points to having one, now I know of one thing that is bad about them.

I don't understand, why cannot the OP parents make the trust spend some money on themselves ?
If it is because only the trustee can do this, and they are not the trustee, then who the heck would the parents have given all that power and control to ?
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Old 11-17-2017, 04:21 PM   #27
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If I loaned the money to help out Mom and Dad, I would put the debt in writing, with payment schedule, and have my parents sign it, plus have all siblings witness it with signatures. Something happens to Mom and Dad in the future, and the siblings might "forget" you loaned the money. Inheritances can do that.
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Old 11-17-2017, 04:27 PM   #28
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I would not borrow against your 401k, can you look into a HELOC instead?

I'd want to have a very clear picture of all the legal parts and the certainty of this trust becoming available in the short term before I touched anything.
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Old 11-17-2017, 04:37 PM   #29
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Oooops, I meant a 401K loan.

They need >$200K for the CCRC closing, more than I can get with a HELOC.

From what I'm hearing from the layer, most trusts he deals with are revocable.
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Old 11-17-2017, 04:46 PM   #30
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How much can the trust could provide now? And over time? If so, perhaps the CCRC might accept a substantial amount down and monthly payments to give you and your parents time to sort out the situation.

Who is the trustee?
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Old 11-17-2017, 05:17 PM   #31
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This is sort of blowing my mind. So the parents tied almost all of their money in this 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?
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Old 11-17-2017, 05:19 PM   #32
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I would definitely speak with the CCRC as soon as possible. I would bet they have familiarity with this situation or similar and might help arrange a bridge loan until the house is sold.
But the house is also in the trust?
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Old 11-17-2017, 05:44 PM   #33
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Where's the original lawyer who set up the irrevocable trust? What do they have to say about this?
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Old 11-17-2017, 05:57 PM   #34
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We just updated our estate plan and used revocable trusts that wont be funded until the first of us passes. An irrevocable Trust was discussed as a future possibility if we exceeded the estate tax exemptions because the irrevocable Trust removes the assets put in the trust from the estate to avoid estate taxes. You basically relinquish control of the assets when they are put into a irrevocable Trust. If the beneficiary is the mother, to me this trust doesnt make sense. If its another beneficiary the assets are likely tied up until the death of both parents. Sounds like a major mistake. Id recommend seeking out a different estate attorney to look over the trust for a loophole and check the title of all assets to make sure they are actually part of the trust.
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Old 11-17-2017, 06:05 PM   #35
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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?
Pretty much that's it.
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Old 11-17-2017, 06:06 PM   #36
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But the house is also in the trust?

Yes, the trust owns the house. The house can be sold but, the proceeds of the sale are owned by the trust.
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Old 11-17-2017, 06:33 PM   #37
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How long has the trust be funded? Has it been more than 5 years? My guess if that is true, you may be looking for a nursing home that will take them if they have 2 ADLs that they need help with. You would be spending down what they have outside of the trust and getting them into medicaid.
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Old 11-17-2017, 06:50 PM   #38
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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?
I wouldn't touch this situation with a 10 foot pole..in my mind the kids need to come up with the needed funds..you're going to get paid back when the parents die and you get the money they had to "protect" from going to eldercare costs
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Old 11-17-2017, 07:23 PM   #39
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If I loaned the money to help out Mom and Dad, I would put the debt in writing, with payment schedule, and have my parents sign it, plus have all siblings witness it with signatures. Something happens to Mom and Dad in the future, and the siblings might "forget" you loaned the money. Inheritances can do that.
That won't protect the OP, since the parents have divested themselves of their assets

Those assets, now held in the irrevocable trust, will be distributed under the terms of that trust, regardless of the parents' debt obligations.

My guess is the trust terms are very restrictive, allowing only the earnings (but none of the trust principal) to be used for the parents' support.
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Old 11-17-2017, 07:27 PM   #40
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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?
Hoisted by their own petard.

The unintended consequence of trying to cleverly avoid using your own resources to pay for your own nursing home care and get Medicaid to pay so that money can go to the kids.
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