Was working with a couple recently that had three grown children. One child lived in Lafayette. Another child lived in Lake Charles. The third child lived in Virginia. The couple told me they wanted to accomplish two things:
- They wanted an irrevocable trust that would protect assets from nursing home costs; and
- They wanted the surviving spouse and the children to avoid probate.
We discussed some of the issues that were involved when a large portion of their life savings were in their IRAs. The couple was serious about protecting what they had because one spouse had a parent that was spending a fortune right now on nursing home costs and private sitter costs. The other spouse that I was working with had seen parents lose a home and significant savings to nursing home costs.
We discussed all of the tax aspects of their estate legal program, including:
- The income tax consequences of assets held in a trust;
- The protection of the step-up in basis of appreciated assets at their death;
- The likelihood that there will be no estate or inheritance tax when they die;
- The income tax consequences of distributions from their traditional IRA and their Roth IRA.
We also discussed how they wanted to provide funds for their grandchildren's education and the best ways to accomplish that. We also discussed, at their request, how owning long term care insurance might fit into their overall legal plan to protect their estate for themselves and their children. They mentioned that they were already staring to look into long term care insurance possibilities with an insurance provider.
At the end of the discussion, I believe they felt that by discussing these issues with me and working toward an estate legal plan to protect their family, they have a plan in place that gives them peace of mind, knowing that they have done what they could to protect their estate.