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PREVIEW
EC Medicaid Asset Protection Trust® Documents
• Spouse One Irrevocable Trust • Trust Summary and Funding Letter
• Certificate of Trust • Information for Trustees
• Will and Testament of Spouse One • Information for Tax Professionals
• Assignment of Personal Property
ElderCounsel’s drafting system, ElderDocx®, puts a smart, efficient document creation and assembly process right
at your fingertips. ElderDocx helps you generate a wide array of elder law (including general estate planning), special
needs planning and Veterans pension planning documents.
This package contains seven different documents generated from the ElderDocx document set for Medicaid asset
protection. Each section includes a table of contents and the first two pages of each document as a preview.
EC Medicaid Asset Protection Trust Preview
Table of Contents
Establishing My Trust
The date of this Irrevocable Trust Agreement is _________________, 20___. The parties
to the agreement are Spouse One (the “Grantor”) and Son Ofoneandtwo (my “Trustee”).
By this agreement I intend to create a valid trust under the laws of Ohio and under the
laws of any state in which any trust created under this agreement is administered.
Identifying My Trust
My trust is called the “Spouse One Irrevocable Trust.” However, the following format
should be used for taking title to assets: “Son Ofoneandtwo, Trustee of the Spouse One
Irrevocable Trust dated ____________________, 20___.”
An Irrevocable Trust
This trust is irrevocable, and I may not alter, amend, revoke, or terminate it in any way.
Statement of My Intent
I am creating this trust as part of my estate plan to ensure efficient management,
administration, and protection of the trust assets for my beneficiaries.
It is my express intent that the principal and income of this trust will not be available to
me for any purpose, including Medicaid.
Family Information
My Wife
I am married to Spouse Two. Any reference in this agreement to “my
wife” is to Spouse Two.
My Children and Descendants
I have one child, Son Ofoneandtwo. All references in this agreement to
“my children” are references to Son Ofoneandtwo.
References to “my descendants” are to Son Ofoneandtwo and his
descendants.
My Lifetime Beneficiary
While I am living, Son Ofoneandtwo is the only beneficiary of trust income and principal
(my “Lifetime Beneficiary”).
In this agreement, “Lifetime Beneficiary” refers only to Son Ofoneandtwo, and does not
include me. As specified in 0 above, under no circumstances may my Trustee invade or
distribute trust income or principal to or for my benefit.
The distribution provisions for income and principal are specified Article Three.
Resignation of a Trustee
A Trustee may resign by giving written notice to me. If I am deceased, a resigning
Trustee will give written notice to the income beneficiaries of the trust and to any other
Trustee then serving.
Trustee Succession
This Section governs the succession of my Trustees.
Spouse One Irrevocable Trust
Page 5
Anna Tourney, Attorney at Law, 123 Throwita Way, Anytown, CA 12345
Certificate of Trust
Spouse One Irrevocable Trust
Declaration of Will
Family Information
My Wife
I am married to Spouse Two. Any reference in my Will and Testament to “my wife” is to
Spouse Two.
Executor
I appoint the following, in the order named, to serve as my Executor:
First: Matthew Hines
Second: Mavis Jones
No Bond
My Executor is not required to furnish any bond for the faithful performance of my
Executor’s duties, unless required by a court of competent jurisdiction and only if the
court finds that a bond is needed to protect the interests of the beneficiaries. No surety
Ancillary Administration
If any ancillary administration is required or desired and my domiciliary Executor is
unable or unwilling to act as an ancillary fiduciary, my domiciliary Executor may
designate, compensate, direct, and remove an ancillary fiduciary. The ancillary fiduciary
may either be a natural person or a corporation. My domiciliary Executor may delegate
to the ancillary fiduciary any powers granted to my domiciliary Executor as my
domiciliary Executor deems to be proper, including the right to serve without bond or
without surety on bond. The net proceeds of the ancillary estate will be paid over to the
domiciliary Executor.
The terms of my Will and Testament supplement the provisions of Ohio law, and to the
extent they conflict, the terms of my Will and Testament prevail, unless the conflicting
provisions of Ohio law are mandatory and may not be waived.
Executor Compensation
My Executor will be entitled to fair and reasonable compensation for the services
rendered as a fiduciary. My Executor may charge additional fees for services that are not
within its duties as Executor, such as fees for legal services, tax return preparation, and
corporate finance or investment banking services.
In addition to receiving compensation, my Executor may be reimbursed for reasonable
costs and expenses incurred in carrying out its duties under my Will and Testament.
My Executor’s Powers
My Executor may exercise, without prior approval from any court, all the powers
conferred by my Will and Testament and any powers conferred by law, including,
without limitation, those powers set forth under the common law or statutory law of Ohio
or any other jurisdiction whose law applies to my Will and Testament. The powers
Spouse One Irrevocable Trust – Will and Testament of Spouse One
Page 10
Anna Tourney, Attorney at Law, 123 Throwita Way, Anytown, CA 12345
Assignment of Personal Property
For value received, I, Spouse One of Anywhere, Florida, hereby assign, transfer, and
convey all of my right, title, and interest in all of my tangible personal property to:
Son Ofoneandtwo, Trustee of the Spouse One Irrevocable Trust dated
____________________, 20___, and any amendments thereto.
My tangible personal property includes, without limitation, all of my jewelry, clothing,
household furniture, furnishings and fixtures, chinaware, silver, photographs, works of
art, books, boats, automobiles, sporting goods, electronic equipment, musical
instruments, artifacts relating to my hobbies, and all other tangible articles of personal
property that I now own or hereafter acquire, regardless of how they are acquired or the
record title in which they are held.
Dated:
This letter will describe how your Irrevocable Trust will operate. It sets forth the various
steps necessary to “fund” your Trust and to carry out the use of the Trust for Medicaid
planning purposes. It is critical that the procedures discussed in this letter are followed
precisely so that the planning objectives desired in establishing your Trust will be
accomplished. Failure to follow these instructions may result in adverse Medicaid and
tax consequences.
Among other things, we will (1) describe what actions you must take to transfer assets
into the Trust, and (2) discuss some of the things you need to know and be thinking about
in the future, to ensure the proper administration of the Trust in a manner that will ensure
the protection of the Trust assets in the event you require long term care.
As you are aware, none of the income generated from the assets that you transfer to
the Trust is payable to you during your lifetime. During this time, it is anticipated that
the Trust will run smoothly and that your Trustee will have few legal problems in the
administration of the Trust. In order to help accomplish the long-range objectives for
which the Trust was created, however, it is necessary that administration of the Trust be
consistent with the rules set forth in the Trust instrument and the tax laws related to
trusts.
The first step in implementing the Trust is for you to transfer your assets into the Trust.
YOUR TRUST IS EFFECTIVE ONLY TO THE EXTENT THAT IT IS FUNDED.
The Trustee collects the income and, in the Trustee’s discretion, pays it to the income
beneficiaries. Under no circumstances may trust principal be paid to you, as Grantor.
This is necessary to ensure that the assets in your Trust remain protected in the event you
require long term care and wish to qualify for government benefits to assist you in paying
for such care.
As you can see, while you are living, the assets that you fund into the Trust will be
administered for the Trust beneficiaries according to your instructions in the Trust. Then,
upon your death, the remaining assets will be distributed to the remainder beneficiaries
by means of the provisions of the Trust.
Although we discussed your Trust in detail and you now understand the basics of how an
irrevocable trust operates, this summary explanation will likely be helpful when you
review the Trust in the future.
By signing the Trust instrument (that is, the Trust Agreement), you created a new legal
entity, or legal being. This is the Trust itself. Within it, you established a number of
rights and responsibilities for persons named in the Trust. These persons serve four roles.
The first is the role of “Grantor.” The Grantor of a trust is the creator of the trust. For
your Trust, you are the creator of the Trust, and therefore the Grantor of the Trust, and
you will transfer assets into it.
The second is the role of “Trustee.” The Trustee of a trust manages the trust, makes
decisions regarding the use of trust assets, and makes distributions pursuant to the terms
of the trust. You have appointed Son Ofoneandtwo to serve as Trustee of your Trust.
The third is the role of “beneficiary.” A trust exists for the benefit of the beneficiaries. A
trust has two types of beneficiaries: the income beneficiaries, who are the recipients of
distributions of trust income, and the principal beneficiaries, who are the recipients of
distributions of trust principal. While you are alive, both the income and principal
beneficiary of your Trust is your son, Son Ofoneandtwo, who may receive distributions
for any purpose, at the Trustee’s discretion, if the Trustee is independent, and if not, may
receive distributions for health, education, maintenance, and support, at the Trustee’s
discretion.
After your death, the income and principal beneficiaries of your Trust are your
descendants, per stirpes, who will receive their shares outright.
The fourth is the role of “Trust Protector.” A Trust Protector is responsible for protecting
the purpose and intent of the trust. In your Trust, the Trust Protector will have the limited
ability to make certain amendments to the Trust, remove a Trustee, and fill Trustee
vacancies. The Trust Protector cannot, however, change the beneficiaries of the Trust.
The responsibilities and the powers of the Trustee are described in Article Nine of the
Trust Agreement. Not all trust instruments contain the same powers, so the Trustee must
pay attention to the language in your Trust to be certain of the authority and options
available. Some of the Trust provisions reflect existing trust law, while others are
included because they suit your situation and may supersede such existing laws for
irrevocable trusts.
Gift Taxes
In general, with limited exceptions, a gift tax return needs to be filed in years in which a
donor makes any transfer by gift. 1 However, gifts can be either complete or incomplete,
and the gift tax only applies to completed gifts. 2
Until the IRS released CCM 201208026 in 2012, it was generally thought that a limited
testamentary power of appointment caused the transfers to an irrevocable trust to be
incomplete gifts for gift tax purposes. 3
The CCM seems to conflict with PLR 200247013, which reached the conclusion that a
retained testamentary limited power of appointment meant that the grantor continued to
possess dominion and control over the property transferred to the trust and that the
transfers to the trust would not be treated as completed gifts.
Therefore, if the objective is to report the gifts accurately as either complete or
incomplete, a careful analysis of the CCM should be made in conjunction with the terms
of the trust.
On the other hand, there does not appear to be anything in the tax code or regulations that
would prevent reporting the transfers to the trust as completed gifts on a gift tax return,
even if they are incomplete gifts. Put differently, nothing in the code or regulations
seems to require a donor to contend that a gift is incomplete, it merely requires the donor
to provide evidence showing all relevant facts if the donor makes the contention:
1
IRC 6019. IRC=Internal Revenue Code (Title 26 of the United States Code).
2
See, e.g., IRC 2702(a)(3)(B); TR 25.2511-1(c)(1), 25.2511-2(f). TR=Treasury Regulations (Title 26 of
the Code of Federal Regulations).
3
See, e.g., PLR 200247013.
Disclaimer: This tax information relates only to the identified trust and may not be applicable to other
trusts. Further, it merely reflects the opinion of the author as of May 26, 2016. You should do your own
research and reach your own conclusions.
4
TR 25.6019-3(a); see also TR 301.6501(c)-1(f)(5), which seems to permit reporting incomplete gifts as
completed gifts: “For example, if an incomplete gift is reported as a completed gift on the gift tax return
and is adequately disclosed, the period for assessment of the gift tax will begin to run when the return is
filed, as determined under section 6501(b).”
5
TR 25.2511-1(g)(1).
6
TR 25.6019-1(e), 25.2511-1(g)(1).
7
IRC 2503(b)(1).
8
IRC 671–679.
9
IRC 671.
Disclaimer: This tax information relates only to the identified trust and may not be applicable to other
trusts. Further, it merely reflects the opinion of the author as of May 26, 2016. You should do your own
research and reach your own conclusions.