Irrevocable Trust Possibility To Avoid Denial question

[getkicksonrte66]

Does an irrevocable trust help an applicant once they get approved?  Wondering, if my father in law got approved pension benefits and then sold his (paid for) home could that cash could hurt him in qualifying the following year?

My suspicions say yes, so my real question is wouldn't it be wise to have all assets in an irrevocable trust so when home sells the trust owns the cash and this would not affect his requalifying for pension benefits the following year.

Perhaps this is a question for an elder law atty., but hoping some one can shed some light on this.

My husbands fear is that his Dad would get qualified -- then sell his home -move into an ALF and the cash from sale of home would disqualify him the following year because he'd then be 89 yrs old and be way over that 80G threshold.

[jpappas755]

Hi,

I am currently attempting to secure A & A benfits for my 89 y/o father.  His application has  been in the adjudication process since Nov. 2009.  Largely, this is because he is a partial beneficiary of a Testamentary Trust.  My mother left me a small farm in Illinois with the income of that to go for my dad's care & support.

Essentially, the VA says that my dad owns the Trust and not me, his son and only living relative.  Proving that I own the Trust (not my dad) has been monumentally difficult.  Effectively, the VA believes that Trusts are to be consisered to be owned by the Veteran if the Veteran derives any support from it.  This is rubbish and false!  Numerus Opinions of General Counsel for the VA have offered that Trusts are not to be considered "countable" if the Veteran is unable to access the "corpus" (Trust assets).

So my counsel is to find youselves a great Elder care attorney to draft a Trust document  specifically prohibiting you and your father from accessing the Corpus until he passes.  Even then the VA will not believe you until you actually send them a copy of your Trust.  Of couse they never ask for a copy.  That , in short is the incompetence of the VA.

I hope that helps!


JP

[getkicksonrte66]

JP  Thank You very much for your insightful response!   

[Fit2009]

Did your father retain a life estate in the property?  If yes, that is probably your issue...

[jpez]

THe concept behind an irrevocable trust (regardless of the VA's stance) is where did the corpus or principle balance come from.
If the funds to open the I. T. come from a 'third party' then the 'living beneficiary' has no claim or right to the funds inside.

If the funds came from assets owned by the L. B., then the trust can be concidered belonging to the L.B.

The next issue is distribution.  If the irr trust is set up as 'simple',(for taxes) then the earnings are credited to the L. B.. even if the trust didnot distribute the earning. (this is the wrong way)
Ideally, an Irr TRust, should be 'complex'(for taxes) this means that all earning are taxed internally regardless of any distribution.
The problem is that in setting up an IRR trust, a vet may creat a situation where when the money does run out, and the vet needs a nuraisng home, Medicaid benefits are unavailable because of how the IrrTrusat was established.  And no, A&A will never send enough th coverthe cost of Nursing home.

[AngelaManz]

an irrevocable trust can be a great option for folks.  You definitely need to see a elder law attorney who handles VA and Medicaid.  They can walk you through the various trust options and design a plan/trust that is flexible and will meet his needs.