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Pennsylvania Estate Planning, Trust, and Probate Frequently Asked Questions (FAQs)

Q: How do I use a trust to protect assets in the event that I need nursing home care?

A: Clients who want to protect assets from being spent for long term nursing care often make gifts to Irrevocable Trusts. The clients choose gifts to trust rather than outright gifting because gifts to trust are protected from the recipients' creditors, law suits or divorce the giftor can choose a single trustee to be in charge of the assets for the giftor's lifetime. This type of planning needs to be done sooner rather than later in Pennsylvania becasue of the most recent state adoptions of the mediciad laws. Furthermore, careful consideration needs to be given to whether or not an income flow is retained by the person or persons making the gift. If you keep the right to income, the asset is taxed in your estate but your heirs get a setp -up in nasis for tax purposes. If you don't need the income, then the trust will not be taxed in your estate but the trust's tax basis is the value of the gift at the time you make it. There is no single best answer. It really depends on your individual circumstances but make sure that you consider these questions with your lawyer and tax advisor.

For more info from David M. Frees, III

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