You’re an educated person. You have a degree, you’ve held a job, had responsibilities and a family. You’ve always done the smart thing and made what you hope are the right decisions, and you’d like to continue doing the smart thing. So when an “expert” hands you a flyer and tells you that for a couple thousand dollars they can create a living trust to save your family tens of thousands of dollars, of course you will consider it. After all, you’ve heard about living trusts and how beneficial they are. Even this blog, over and over again, has touted the wisdom of creating a trust.

The problem is that not all trusts are created equal. And unfortunately, not all “experts” are what they say they are.

The website of consumer affairs warns about the recent onslaught of fraudulent annuity scams and “trust mills”. These are people who pass themselves off as “legal experts”, but who often have no legal training at all, let alone a law degree. They use fear tactics and misleading information to scare people (most often the elderly) into creating unsound trusts and estate planning documents.

Living Trusts are a useful tool, and can provide most families with a valuable layer of protection—when created correctly, by an attorney with a background in estate planning law, who has met with you and is familiar with your unique situation. Trusts created by trust mills are often boilerplate packages that may not even comply with your state law or with the needs of your family.

You wouldn’t go into surgery without being sure of the qualifications of your doctor, why would you be any less cautious with your finances? Don’t create an estate plan until you’re sure of the qualifications of your attorney. After all, it’s the smart thing to do.

If you have heard me speak anytime in the past two years, you have heard me say that the greatest threat that you face to your life savings is the ever rising cost of nursing home care. Currently, the average cost of care in a nursing home is about $6000.00 per month. Of course you aren’t going to a nursing home, but chances are someone you love will. In fact, about 50% of the population spends time in a nursing home sometime during their life. If that loved one runs out of money to pay for their own care in a nursing home, and if they don’t have long term care insurance, they are out of options. They must apply for Medicaid, the federally funded program that pays for nursing home care after someone runs out of money to pay for nursing care themselves.

After I speak with people about this threat I often hear, “Even if I spend all my other assets, my house is protected, so I really have nothing to worry about.” In some respects, the house is protected, at least while you are alive. The rules that govern Medicaid eligibility allow a person who needs nursing home care to keep their house as long as they have “the intent to return home.” In Medicaid-speak that means that Medicaid will not take your home while you are alive.

However, the organization that administers Medicaid keeps a running tally of the amount that they have spent on a person’s care after they qualify for the program. Additionally, Medicaid has the right to put a lien on that person’s house while they are still alive so Medicaid can guarantee it gets paid when the home sells or the owner dies. After the owner passes away, Medicaid can either foreclose on the lien or initiate estate recovery of the money they spent that person’s care, either way, Medicaid will be entitled to take back out of the equity in the house everything they’ve spent.

On top of all of this, Medicaid has a cap on how much a home can be worth before someone will even qualify for the program, so those that are fortunate to have bought a house in the right neighborhood may not qualify for Medicaid because their house is worth to much.

So while Medicaid will say that the house is protected, they aren’t quite telling the whole story. We don’t want you to be both out of money and out of options, that’s why a meeting with us can help you discern how and when to plan for the nursing home spend down. We employ sound legal strategies to make sure that allow you to keep your home not just while you are alive, but for your children and grandchildren as well.