How a trust can help with estate planning even if you aren’t wealthy

On Behalf of | Feb 17, 2021 | Estate Planning |

People often think of trusts as a way for parents to protect children born with silver spoons in their mouths. It is common to associate trusts with very wealthy families. However, a trust isn’t just a tool for someone with more money than they could spend in a single lifetime.

Trusts serve a number of estate planning purposes. For those who have always worked in physically demanding positions throughout their lives, a trust could be a crucial tool for passing something on to their loved ones after death.

Blue-collar workers may feel the impact of their career during retirement

The more physically demanding your job is, the more likely it is that your work could do damage to your body. Even if you made it to retirement without any major injuries, you may have still done damage to your joints, spine or muscles.

Years of minor, work-related trauma might mean you need more support as you age. Unfortunately, the more care you need, the more likely it is that you will either go in to debt as you get older or need to apply for Medicaid.

Trusts help you qualify for Medicaid

Medicare only covers so much. If you need a nurse at your home or to live in a nursing home, you need Medicaid coverage instead. When you apply, the government will look back at five years of your financial records and penalize you for gifts or transfers during that time.

Planning now and moving major assets, like your house, in to a trust could mean that you qualify for Medicaid more easily when you need it.

Trusts keep your medical debts from consuming your assets

Medicaid won’t hold your house against you, but it might try to make a claim against your house’s value after you die. The state wants to recover any benefits it paid to you from your estate.

Even if you didn’t have Medicaid, your health care provider could demand that your estate pay all of your debts. The more care you need, the more likely those debts will eliminate the legacy you wanted to leave for your family. A trust helps protect you if you need medical help and will protect the inheritance you want to leave behind.