VA Pension Benefit Planning Raleigh

As a Certified Medicaid Planner™ and V.A. Certified Attorney, I am often privileged to help our clients and their families set up secure plans to shelter their assets from often crippling long- term-care costs. By setting up a series of Irrevocable Trusts and putting some or all of their assets into the Trust, our clients can potentially qualify immediately for the veteran’s pension benefit — and then in five years meet Medicaid’s “lookback period” and not have to spend down their Trust assets.

Unfortunately, the trade-off when setting up these Trusts is that our clients are locking in their planning wishes and giving up control of the assets in the Trust. This can become problematic if the clients want changes down the road. After all, the Trusts were irrevocable when they were set up, so there is no way for the clients to simply make the changes and sign the updated documents because they are not the Trustees, they are not the beneficiaries, and they do not own the assets in the Trusts.

So how do we make changes to an irrevocable plan? It’s a little complicated, but it is doable. The Trustee typically has an unlimited right to withdraw assets from the irrevocable Trust for whatever purpose they want. So what the Trustee can do is set up NEW Irrevocable Trusts with the changed terms and conditions. Then they can take the assets out of the old Trusts and move them to the new Trusts. So, really, making a change to an Irrevocable Trust amounts to creating a whole new Trust. It also means retitling all the Trust assets into the name of the new Trust, and changing the pay-on-death beneficiary of any other accounts or assets so the beneficiary is the new Trust. Like I said, complicated, but possible.

I have worked with a lot of clients over the years who started out with Wills or Revocable Living Trusts, and the process for amending those documents is simple and straightforward. We make the changes, print the documents out, and the client signs them. In the case of Revocable Living Trusts, there is no change to the name of the Trust, so there is no change that needs to be made to assets already titled in the name of the Trust, nor do beneficiary designations need to be made. It’s just amending and restating the Trust with the new terms. Unfortunately, our clients who have moved from Revocable Living Trusts into care assistance planning using Irrevocable Trusts are often under the impression that they can change the irrevocable documents just as easily, and it is simply not the case.

While care assistance planning involving Irrevocable Trusts can yield great benefits for my clients and their families, making changes to those Trusts is not so simple. Changes can be made, but because of the time and cost involved, we caution our clients to be absolutely sure they want to make those changes before we proceed.

If you have any questions about Revocable and Irrevocable Trusts, please contact our office, we are here to help: (919) 844-7993.