Florida Asset Protection Trust
Planning ahead can give you a huge financial piece of mind. In the last several years this Trust has become very popular in Northwest Florida. This is a new type of trust that is not reserved for the wealthy. Anyone who is interested in Medicaid Eligibility, Asset protection from future creditors, legal tax avoidance, making sure your kids future ex-spouse is financially blocked from your assets and surprising flexibility needs to learn about this Trust.
You have probably worked for decades and paid into the system for retirement. You never had a chance to spend those taxes because they were automatically taken out of your paycheck. You followed the rules.
Well, Medicaid doesn't care about that. They are a government agency who follow government rules. They have two mathematical tests.
Asset Test - This is where the Florida Asset Protection Trust really helps. The government says you have countable assets and non-countable assets. There is a 5 year look back they use to make sure this is not fraudulent. By planning ahead you can make sure that you have non countable assets. They must be classified properly in the trust. If you need Medicaid to pay for your nursing home then you will be eligible. If you have too many assets the government will require you to spend through you and your spouse’s life savings. After that is gone THEN you get the help your entitled too. The spouse is left financially destroyed.
Income Test - This also can be structured ahead of time to make sure you can pass this test as well. The earlier you do this the earlier your eligible for all the protections and benefits.
Asset Protection from Future Creditors
The Florida Asset Protection Trust is really helpful in this area. It can protect you from your son or daughters future ex-spouse. The FAPT gives the flexibility to make sure protection of the FAPT assets from future liability like car accidents, negligence or divorces.
The FAPT offers huge tax benefits. For the record, I am not giving Tax law advice. I will make sure that you receive an accountant’s official determination of your tax situation. That being said I will say that the FAPT is not taxed like a traditional trust. Those require a separate EIN (social security number) so that the trust files a separate tax return. The FAPT is a disregarded entity that the IRS doesn’t tax. Instead the IRS taxes the FAPT assets as if you owned them which can provide a big tax savings.
The Florida Asset Protection Trust is an irrevocable trust. Under the old rules this was a bad thing. But the FAPT is not under the old rules. This new approach allows the FAPT to be way more flexible than before. The FAPT is designed to give the settlor of the trust complete control over the trust.
The FAPT permits the settlor or grantor of the trust to change the beneficiary at ANY time. To change the Trustee anytime you want. In a traditional irrevocable trust the trust cannot change after one spouse’s death. The FAPT allows changes even after a spouse’s death.
This is a discretionary trust. This means that the trustee is NEVER required to distribute income or principle to a beneficiary. This is beneficial if you want to make sure your beneficiaries ex-spouses from getting to the principle in a divorce proceeding.
The VA has several amazing programs that will give monthly tax free support to veterans or their spouses. The VA will use a similar Asset Test. If your assets are in a properly executed FAPT then they will NOT be counted as assets and this means you could be eligible for thousands of dollars per month to help with your home care or nursing home care.
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Anyone with assets over $100,000 should consider preparing now so that if the long term care bug bites it won’t be a financial disaster for the healthy spouse. Please call us today for a free consultation at 850-650-3847.