Benefits of a Will vs a Revocable Trust for My Mother

Updated on July 04, 2012
C.C. asks from Mamaroneck, NY
6 answers

My mother recently finished her will, following my father's death a year and a half ago. After speaking with my friend and her mother, I'm wondering if my mom should have a trust as well. They insisted that if my mother doesn't put her investment money and house in a trust, that my siblings and I are a great disadvantage as far as the potential to lose everything. They posited a what it scenario involving my mother needing long term care/a nursing home.

I know that a will has to go through probate, which means some hefty lawyer fees...which I'm actually ok about. My friend mentioned paying a high tax for my mom's estate (with her house and investments, it's probably worth one million)

My mom lives modestly/carefully off interest and dividends from her investment money, a small pension of my dad's, and social security. She often talks about wanting us kids to get a good chunk of money when she dies, which is why she refuses to touch the principal. We encourage her to enjoy her money, travel more, etc, so this is not a matter of greedy children wanting her money.

My concern about not having the money in a trust is that she could lose everything after spending a couple years in a nursing home.

I have a call in to the lawyer who helped me write my will and trust for my daughter. He's out of the office until Friday. In the meantime, I thougth I'd ask you mommas what your understanding is of the benefits of a will only vs a will and trust. If nothing else, I'd like to have a clear understanding of both scenarios to have an educated discussion about this with my friend and her mom.

Thanks for your help.

What can I do next?

  • Add yourAnswer own comment
  • Ask your own question Add Question
  • Join the Mamapedia community Mamapedia
  • as inappropriate
  • this with your friends

So What Happened?

Thanks, everyone, for your responses. I didn't realize it, but the Medicaid planning mentioned must be what my friend's mom was talking about since she had mentioned the 5 year aspect. And I think that my mom, since she didn't buy long term care, was ok with spending her money on long term care. I guess it's the estate taxes that could be avoided by having a trust. You all brought up very good points that I will discuss with the attorney tomorrow, and I will be sure to ask if he is an elder law attorney as suggested by Jo W. I also did some googling on the subject (which can be daunting). Apparently, since my brother is living at home with my mom, there's something about being able to avoid selling the house since he's living there. Obviously I still have a lot of questions that need to be answered, but you all got me off on the right start. Thank you.

More Answers

J.W.

answers from St. Louis on

What you are talking about is beyond wills and trusts. I believe what you are talking about is Medicaid planning. Depending on what you are put in a nursing home for it cost about 4 to 7 thousand a month. Yes, that will deplete savings pretty damn quick but nursing homes aren't free.

Medicaid planning is not without risks it pretty much means handing over everything to your children and hope one of them isn't greedy. Medicaid has a five year lookback so if she went in a home before five years they will come back and take all the assets.

Thing is we looked into it for my dad when my mom was alive because she had Alzheimers. In that case it could have wiped out all my dad's assets as well leaving him to live the rest of his life with nothing. In your case it is a matter of wiping out her assets before Medicaid takes over since there is no surviving spouse to worry about.

Another thing to consider is it doesn't work with a million. Pretty much you will have to wipe out most of it anyway. At least this was the problem we had with my dad so we never went ahead with it. Then again we didn't have the luxury of waiting five years so again you are different.

Oh this is beyond a lawyer who deals with wills and trusts. If your attorney doesn't refer you to an elder law attorney I wouldn't trust your attorney. This is very complicated law that only an attorney specializing in elder law understands.

2 moms found this helpful
Smallavatar-fefd015f3e6a23a79637b7ec8e9ddaa6

J.C.

answers from Philadelphia on

Your mom could start giving you guys monetary gifts to reduce the money in the estate. If your mom needs long term care however she should pay for it. It would be stealing from the tax payers to expect them to pay for your mom's care. Also, you get what you pay for in terms of nursing care. She may need that money to provide for herself. So IMO she should not hide it or give away her estate. She may need it.
EDIT: nursing homes in this area cost between $8,000-$12,000/ month plus medicines etc. Also, when my aunt went in to a home they wanted to know any real estate she owned going back 7 years.

1 mom found this helpful
Smallavatar-fefd015f3e6a23a79637b7ec8e9ddaa6

L.W.

answers from Albany on

The will determines who gets what. The trust means there will be something "left" to get if your Mom has to spend time in a nursing home/long term care.
If she has long-term care insurance, you PROBABLY don't need a trust, as the LTC Insurance takes care of some/most of the nursing home fees. HOWEVER, at least in NY, "they" can do a five year "look back", and if the trust is created during that five years, those assets can be used for long term care. That five year look back is set to become a ten year in the near future (if it hasn't already - my Mom died in 2008, so my data may be a little out of date by now).
Depending on the lawyer, the will/probate costs shouldn't be THAT expensive, and I think the taxes are paid on each individual share of the estate, as opposed to the total value of the estate. (Again, I'm going on old data for this one, too...Fortunately (or unfortunately?) I had to settle out four estates in a period of six years...None of them overlapped, but there was a period of time where I'd finish off one estate, and within two months, I was ensconced knee deep in another one....covering multiple states, a trust that had been established 30+ years prior, and no direct heirs (nieces and nephews, no kids))

1 mom found this helpful
Smallavatar-fefd015f3e6a23a79637b7ec8e9ddaa6

A.S.

answers from Chicago on

You are correct that you will have to go through probate with a will. My husband and I each have trusts, and my mother had only a cookie-cutter/online will that was notarized after my father passed away. I encouraged her to properly take care of her assets before a major surgery. Our attorney explained that, in Illinois, the average amount of time to settle probate cases in court was approximately 9months. My mother's assets would be frozen for that period of time, so even though she didn't have any debt, all expenses (outstanding medical bills, property taxes, utilities, etc) would have to be covered by the family or not paid while probate was pending. The court filing fees and attorney costs for probate could even exceed the cost of setting up the trust.

I don't believe that her assets would be protected from paying for nursing homes or long term care. If she was unable to make those decisions, the trustee and financial power of attorney probably be making the payments from your mother's assets.

Having her assets in a trust will protect her beneficiaries from paying estate taxes.

1 mom found this helpful
Smallavatar-fefd015f3e6a23a79637b7ec8e9ddaa6

S.R.

answers from San Francisco on

If she has assets then she definitely needs to do a trust. This will make it easier with no probate when the time comes, you also won't have to pay an inheritance tax (as you would with a will) and it will allow to enjoy all of what she has left for you when the time comes. as for if she ends up in a nursing home, the others are right, those expenses will come out of her savings and could get depleted. Due to her assets, she more than likely won't qualify for any assistance. You should address this with your attorney and maybe have her come with you so they can explain the implications of not having one. Good luck.

1 mom found this helpful

C.M.

answers from New York on

She should have both.
For more information, you could visit my blog: www.moonelightpublishing.blogspot.com.

For Updates and Special Promotions
Follow Us

Related Questions