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a "large estate" is if your estate would be worth more than one million dollars. This involves inheritance or estate tax issues and should be discussed with an experienced attorney or accountant.

Living trust to qualify for Medicare

Many people try to use a living trust to avoid having to pay for their care in the event they have to enter a nursing home or similar long-term care facility. This requires the trust to be irrevocable and requires that the trustee and the beneficiary be different persons. You lose control of the asset the moment to trust takes effect. There is also a look-back period in which you are disqualified from benefits. This period changes from time to time, so you need to check with a lawyer to see if you will benefit from this kind of trust.

Remember, if you designate your child or children as the trustee(s), you must consider what would happen if they become financially strapped and those assets are available in some way.

You should also consider your age, health and family medical history, and the likelihood that you will require a long-term care facility. Most people die in a hospital without needing a long-term care facility.

Another important thing to remember is that there are waiting lists for long-term care facilities, which will get longer as the "baby-boomers" age. Self-pay patients get first crack at openings and at the better facilities. I usually recommend enough self-pay assets to assure six to twelve months of non-Medicare payments.

Living trust to avoid liability or taxes

First, you should know that for many purposes, if you are the maker or the trust, the beneficiary of the trust and the trustee, the trust will not exist legally. You should review what you are doing and why with an experienced attorney, since you may be wasting your time and money on something that will not do what you think it will.

Second, you should understand what bad things may happen if you separate yourself from control of your assets in the event that you need to have a true trust. Whoever you give control to may not be as trustworthy as you think, or may have a change of finances that make your assets tempting to use. If you use a bank trust department, the bank may merge or go out of business, especially today, your files may be lost, and you may have no fall-back reliable trustee designated.

As in the case of a living will, your living trust should nominate someone as guardian, guardian of the estate or conservator in the event problems develop and the case has to go to court.

Get competent advice before executing either a living will or a living trust

This is not an area of law for doing it yourself. Every state is different and sometimes there are federal rules that need to be considered as well. Getting competent legal advice is the best way to avoid unintended consequences.

Learn more about this author, Raymond Bilodeau.
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