Avoiding probate is essential to protecting your assets from being spent down to pay for long-term care costs. There are various types of trusts that can be used to safeguard your assets, including retirement funds. In this guide, I will provide you with the 10 rules of avoiding probate in North Carolina:
Rule 1: Use a trust to protect your assets
A trust is a legal, estate planning tool that can be used to place assets, including retirement funds, to be preserved for your family during your life and then passed on to your children and grandchildren. Certain types of trusts can also protect assets from being spent down to pay for long-term care if a benefit like Medicaid is used.
Rule 2: Revocable Living Trust
A revocable living trust is not an effective tool when applying for a Medicaid benefit to pay for long-term care. As the trustee of a revocable trust, you have the right to revoke or cancel the trust, and the assets in the trust are still a countable asset to you, subject to the so-called “Medicaid Spend-Down.”
Rule 3: Irrevocable Trust/Medicaid Asset Protection Trust
An irrevocable trust, specifically written for long-term care Medicaid qualification, is an effective tool to protect your assets. As the grantor of an irrevocable trust, you are not the trustee and do not have the ability to revoke or cancel the trust. This type of trust provides protection, but you are not in control of the assets within the trust. You can appoint the duty of trustee to a trusted child or family member or an attorney.
Rule 4: Convertible Trust
A convertible trust may be the right option for those who are not yet ready to relinquish control of their home and other assets to a third-party trustee. As a couple or individual, you can be your own trustee, and the trust will convert to an irrevocable trust when the grantor elects by signing a short amendment or becomes incompetent or incapacitated.
Rule 5: Consult with an experienced elder law attorney
Consulting with an experienced elder law attorney is critical to understanding which type of trust is best for your specific needs.
Rule 6: Plan ahead
Planning ahead is essential when it comes to protecting your assets. Waiting until you need long-term care can make it more challenging to protect your assets.
Rule 7: Know the North Carolina probate laws
Knowing the North Carolina probate laws is essential to avoiding probate. An experienced elder law attorney can help you understand the probate process and how to avoid it.
Rule 8: Update your estate plan regularly
Updating your estate plan regularly is essential to ensuring your assets are protected.
Rule 9: Review your beneficiary designations
Reviewing your beneficiary designations regularly can help ensure your assets go to the right people when you pass away.
Rule 10: Don’t try to do it yourself
Attempting to create a trust or an estate plan on your own can result in costly mistakes. Working with an experienced elder law attorney can help ensure your assets are protected and your wishes are carried out.
In conclusion, protecting your assets, including retirement funds, is essential to ensuring you can pass on your legacy to your loved ones. If you need help understanding which type of trust is best for your specific needs, contact me for a free consultation.
Greg McIntyre
Elder Law Attorney
Estate Planning & Elder Law Attorney
