Can Your Irrevocable Trust Sell Your House?
Revocable trusts are great for indecisive people, but only irrevocable trusts are capable of conveying the full benefits of trusts while you are alive. When you establish a revocable trust, the property in the trust still legally belongs to you, and you are still responsible for paying taxes on it; a revocable trust only takes on all the characteristics of a trust, when the grantor dies. Therefore, if you want to establish a trust to protect your assets from creditor claims from Medicaid during probate, it must be an irrevocable trust, and you must transfer the property to it at least five years before you apply for Medicaid. Most people who set up Medicaid trusts do so because they want their children to inherit the family home. Without the Medicaid trust, the parents would either have to sell the house before entering the nursing home, or else the probate court would compel the personal representative to sell the house and use some or all of the proceeds to reimburse Medicaid. What happens to your house if you transfer it to a trust, but later decide that you want to sell the house? For help envisioning how your retirement will be if an irrevocable trust legally owns most of your property, contact a Tampa estate planning lawyer.
What Happens to Your House Ten Years After the Medicaid Five-Year Lookback Rule?
A recent Moneywise column tells the story of a retired woman named Lisa who wants to sell her house, but it is titled in the name of her irrevocable trust. By the time Lisa and her husband were in their early 60s, they knew that they wanted their two sons to inherit their house. They also knew that their only options for paying for nursing home care were selling their house or applying for Medicaid. Therefore, they established an irrevocable trust and transferred the house to it sooner rather than later, so they could steer clear of the Medicaid five-year lookback rule.
Years later, Lisa and her husband were retired and plenty healthy to continue living in their house, but they decided that the best decision for their finances was to sell their house and buy a smaller one in a less expensive part of Florida. Since the house legally belongs to the trust, the trust must sell the house; Lisa and her husband cannot sell it, because they no longer own it. Instead, the trustees of the trust must sell it on behalf of the trust; in this case, the trustees are Lisa’s sons. The proceeds of the sale will then belong to the trust, and the trust can use the money to buy another house. In other words, to sell property in your irrevocable trust, you must instruct the trustees to do it.
Contact David Toback About Maneuvering Within the Restrictions of Your Irrevocable Trust
A Central Florida estate planning lawyer can help you if your irrevocable trust has become a third wheel in your retirement. Contact David Toback in Tampa, Florida to set up a consultation.
Sources:
msn.com/en-us/money/realestate/i-put-my-1-1m-home-in-an-irrevocable-trust-with-my-sons-as-beneficiaries-and-i-now-want-to-sell-it-but-am-i-forced-to-buy-a-house-of-equal-value/ar-AA1S9YyV?ocid=msedgntp&pc=ACTS&cvid=693afb27d2fe420ba7035a5540352aac&ei=14
