Sabtu, 06 April 2013

Asset Protection Trust planning Veterans ' benefits

An Asset Protection Trust (“APT”) is an intentionally defective Grantor Trust. An intentionally defective Grantor Trust is one that treats the trust property differently for income tax purposes of estate tax and gift tax. The veteran will be the lender but not a beneficiary. The trust uses Internal Revenue Code § 671-677 that afford a differential tax treatment for income tax purposes.

For most veterans their most important asset is their residence. As the veteran keeps the House is not part of his equity eligibility purposes Veterans Administration (“VA”); is a “countable resource”. However, if the veteran qualifies for the monthly pension benefit and later sells the House proceeds will disqualify the veteran to receive any additional retirement benefits-veterans until the veteran spends up to a level of eligible activities.

However, if the residence has been submitted in confidence before the application GOES and then sold by the trustee to the proceeds from the sale wouldn’t affect veteran’s retirement benefits. In addition, if the veteran benefits Medicaid needs more than five years from the date that the trust was set up and funded (after two events) the corpus of trust is not part of the Medicaid application of veteran.

The veteran will be the grantor of the trust and the veteran’s children will be the beneficiaries. The trust agreement provides for the rights and duties of the trustee for the trustee can make discretionary distributions to beneficiaries. In addition, it is recommended that the trust agreement provide for a reliable protector that has an absolute power to remove and replace the trustee who does not act in the interest of the purpose of the trust. Establishing trust veteran can have more control over how the trust property are to be deployed and used, even if the veteran has no legal right to the trust corpus.

Some advantages of intentionally defective Grantor Trust are:

The trust can hold and sell the residence of a veteran and keep the proceeds. The proceeds will disqualify not for veteran retirement benefits or Medicaid for the duration of the veteran;
The proceeds from the sale of the residence will not be subject to estate recovery of Medicaid;
The trustee can sell the residence with the creditor to be able to take advantage of the Internal Revenue Code § 121-exemption of capital gains up to $ 250,000;
After the death of the owner, the trust will receive intensified base for purposes of income tax; and
Will keep the assets out of the hands of irresponsible children.

Tidak ada komentar:

Posting Komentar