Is A Castle Trust™ Safe? | Berry’s Bites

Michigan Estate Planning Lawyer, Chris Berry, reviews what a Castle Trust™ is, how it can protect your family and how it is not only safe, but a great tool for families looking to avoid probate, control the distribution after death and builds in asset protection.  Asset protection from law suits and asset protection from the devastating cost of long-term care costs.

Is a Castle Trust™ Safe? Transcript:

Today’s Berry Bite, we’re going to talk about whether the Castle Trust is safe. Is the Castle Trust safe? And so before we do that we need to define what the Castle Trust is. And the Castle Trust is a form of asset protection trust so it’s like a revocable trust in that it can avoid probate and control the distribution but what the Castle Trust does is it avoids probate, controls the distribution but also builds in asset protection and that asset protection takes two forms.

First of all it protects you from lawsuits so if you were to pull out and hit someone on a motorcycle, whatever you have in the trust would be protected. And then second, and this is what really appeals to a lot of people, is it can start the five year clock ticking for Medicaid purposes so it can protect you against the devastating cost of longterm care. Because we have this governmental program called Medicaid that will pay your nursing home costs but to qualify for Medicaid there’s an asset test involved and they look back five years to see if you moved any money around.

What the Castle Trust allows you to do is move assets into the Castle Trust, you remain the trustee but now what it’s done is started that five year clock ticking for Medicaid purposes so if we can make it five years then we can have Medicaid pay at a base level of care and then we have a pot of resources available to pay for any additional services to improve our quality of life. And then if we’re a married couple, to ensure that if one spouse needs longterm care the healthy spouse is not completely impoverished because they can access the funds in the Castle Trust.

This Castle Trust, the question is is it safe? And the answer is yes because it’s based on principles that have been around since the 90s. And the government’s aware of this type of planning and not only are they aware of it but they also do not look unfavorably to it. They don’t penalize people who plan ahead. And the reason I can say this is that because so many attorneys were doing trusts like this as early as the 90s. In 2006 the government changed the rules and what they said is, “We went from a three year to a five year look back period.” Because so many attorneys were doing trusts like this.” They changed the lookback period from three years to five years. That tells us the government is aware of this type of planning.

Now the question is, how do I know they don’t look unfavorably to it? Because when they made that change they grandfathered in that prior planning so whatever you had in the trust, if you set this trust up in 2005 and then they changed the laws in 2006 whatever they had in the trust would be grandfathered in. The government’s aware of it and they don’t look unfavorably to it.

Because of that the question being is the Castle Trust safe, I would argue that yes, it is. It’s based on principles that have been around since the 90s. And lets say the government does change the rules again. Maybe they go from a five year to a seven year look back. Most likely they’re going to grandfather in any prior planning. Is a Castle Trust safe? The answer is yes.

Learn More About the Michigan Medicaid Asset Protection Trust

The Castle Trust™ is a form of Medicaid Asset Protection trust that can help protect against nursing home costs to ensure that you have the best quality of life possible.  To learn more about how the Medicaid Asset Protection Trust works to protect your family from the devastating cost of long-term care, attend one of our Clarity Builder™ Workshops, which are free to attend.  All you have to do is call us at (888) 390-4360 or register by clicking the button to the right.

The Elder Care Firm has offices in Ann Arbor, Brighton, Bloomfield Hills, Livonia, Novi and Lansing.  We help clients throughout Metro-Detroit and the surrounding areas.

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