Trust Administration Case Study
Mr. and Mrs. V were in their mid-70s and healthy when they came to Phelan, Frantz, Ohlig & Wegbreit. Mr. V was in the process of retiring from a consulting position and the couple was thinking about the legacy they would leave to their family. At the time, Mr. and Mrs. V had 2 adult children and 3 grandchildren. They owned two homes – one in a suburban residential neighborhood in New Jersey where they raised their family and one at the New Jersey shore. Their children and grandchildren spend a significant amount of time at the shore house and Mr. and Mrs. V want to make sure that it stays in the family for the use and enjoyment of many generations.
Mr. and Mrs. V also knew that if one or both of them were to require long-term health care, it could quickly deplete their assets. Further, they had heard that in order to qualify for Medicaid to supplement the cost of long-term health care, they would need to “spend down” their assets.
After an analysis of their total assets and a thorough discussion about their relationship with their children and their legacy desires, Phelan, Frantz, Ohlig & Wegbreit lawyers recommended that Mr. and Mrs. V place their shore home in an irrevocable trust, naming their adult children as both the trustees and beneficiaries of the trust. By doing so, Mr. and Mrs. V essentially made a lifetime gift of the shore house to their children. Because Mr. and Mrs. V did not need to qualify for Medicaid until more than five years after the date of the gift, the shore house was not considered an asset for purposes of their Medicaid application. Accordingly, the shore house was able to stay in the family for years to come.