Ronstar
Moderator Emeritus
DW and met with an elder care attorney to discuss MIL's situation. MIL (90 yo) currently has a revocable trust. The elder care attorney is suggesting an irrevocable trust. The attorney's idea is to leave assets equal to 5 years of nursing home care expenses outside of the trust, and put the remainder in an irrevocable trust to shield the assets.
We also met MIL's FA. He doesn't think that the irrevocable trust is a good idea. He claims that heirs to funds in the revocable trust have the benefit of a step-up basis and irrevocable trusts do not. MIL's basis is only about 40% of her portfolio value. He claims that there is no need to shield assets - that the investment portfolio and ss generates enough income to fund nursing home care without dipping into the principal.
Based on what the FA said, the heirs would be subject to significant taxes on the gains from the irrevocable trust when they sold the inheritance. Not so much from the revocable trust due to step-up basis.
The FA said that in many cases elder care attorneys like irrevocable trusts because they can increase their fees by creating the additional documents.
I tend to agree with the FA. He was quite convincing in describing why an irrevocable trust isn't necessary. We haven't gone back to the elder care attorney for round 2 yet.
I know I may not have provided much to go on here, but is there something that I'm missing?
We also met MIL's FA. He doesn't think that the irrevocable trust is a good idea. He claims that heirs to funds in the revocable trust have the benefit of a step-up basis and irrevocable trusts do not. MIL's basis is only about 40% of her portfolio value. He claims that there is no need to shield assets - that the investment portfolio and ss generates enough income to fund nursing home care without dipping into the principal.
Based on what the FA said, the heirs would be subject to significant taxes on the gains from the irrevocable trust when they sold the inheritance. Not so much from the revocable trust due to step-up basis.
The FA said that in many cases elder care attorneys like irrevocable trusts because they can increase their fees by creating the additional documents.
I tend to agree with the FA. He was quite convincing in describing why an irrevocable trust isn't necessary. We haven't gone back to the elder care attorney for round 2 yet.
I know I may not have provided much to go on here, but is there something that I'm missing?