Planning for Long-Term Incapacity with a Deferred Sales Trust

While no one wants to think about the possibility of becoming incapacitated, the reality is that life is fragile. A sudden accident or health emergency could leave any of us unable to care for ourselves or make critical decisions about our well-being. As such, planning for incapacity is essential to protect you, your family, and your legacy. You can take proactive steps to have incapacity planning documents prepared and to reserve the necessary financial resources to afford long-term care and protect your financial interests. A deferred sales trust – The Tax Tool You Didn’t Know You Had – is one way to accomplish these financial objectives.

Are you ready to learn how a DST can protect the wealth you’ve worked hard to build in case you require long-term care due to disability or incapacity? Contact 453 Trust Powered by Pennington Law today for an initial case evaluation with a knowledgeable estate planning attorney.

Reasons to Hire an Incapacity Planning Attorney

Are you interested in harnessing the power of a DST to protect yourself and your loved ones? If so, turn to 453 Trust Powered by Pennington Law for help because:

• Our firm earned recognition as the Best Deferred Sales Trust Law Firm in the U.S. in 2024.
• Firm founder Andre Pennington has appeared in numerous publications for his work, including the New York Times, Forbes, Inc., The Wall Street Journal, and USA Today. He has also earned listings in Super Lawyers, Lawyers of Distinction, and Best Attorneys in America.
• Our experienced legal professionals practice nationwide in matters including asset protection, estate planning, trusts, and wealth and fiduciary issues.
• Unlike other firms that rely on outside professionals for assistance, we have built an IRS-compliant program under one roof to offer you comprehensive service throughout your case.

As one client wrote about our services:

“Pennington Law provided excellent and well-valued service! They were always available to answer questions and guided me through every step of the process. The entire team is knowledgeable, approachable, and ensures their clients are given great service.”  

How a Deferred Sales Trust Supports Incapacity Planning

Prolonged disabilities or incapacity typically necessitate long-term care, such as home health services, assisted living facilities, or nursing home care. Unfortunately, the cost of securing this care is considerable. A deferred sales trust can support incapacity training in several critical ways.

First, it offers a way to shield the planner’s assets from creditors trying to collect medical or long-term care expenses incurred during incapacity. Second, a DST can reinvest assets placed in it to grow wealth, providing an income stream that can help cover the costs of long-term care. Third, it reduces the tax liability that you would otherwise encounter if you sold appreciated assets due to its tax deferral characteristics.

Protecting Assets from Medical and Long-Term Care Costs

The medical costs associated with long-term care can drain your family’s assets and the wealth you’ve spent your life building. Fortunately, you can protect this wealth through proper estate planning.

A comprehensive estate plan can guide your family members about what to do if you find yourself in this precarious situation. A medical power of attorney can make informed decisions about your healthcare. You can also prepare a HIPAA authorization for your agent or family members, allowing them to receive your protected health information and make informed decisions about your care. You can also prepare important documents, naming a medical power of attorney, who you authorize to make medical decisions on your behalf.

Living wills or advance directives explain whether you want life-sustaining measures in emergencies and provide instructions about your end-of-life care.

You can also provide an easier transition and avoid unnecessary legal expenses when you create a financial power of attorney document that names an agent you authorize to make financial decisions and manage financial matters on your behalf.

Certain types of trusts can protect assets from seizure by medical creditors seeking to collect payment for long-term care. You can also structure trusts to help you qualify for Medicaid and other government benefits that cover some or all the costs of long-term care. Trusts also allow you to invest wealth to create an income stream that can provide financial resources to pay for medical and long-term care.

Our estate planning lawyers have a comprehensive understanding of estate planning and tax law. We can explain the documents and other arrangements we can create on your behalf and how they can help in case of incapacity.

What to Do Financially If You Can’t Work Due to Incapacity or Health Issues

If you’re no longer able to work due to health issues, you may want to consider reorganizing the wealth you’ve spent your career building into trusts and other financial structures. Not only can these tools shield your assets, but they can also provide you with an income stream that can replace your wages, salary, or business income.

Avoiding Probate and Conservatorship Through a DST

A deferred sales trust can also help you avoid conservatorship should you become incapacitated, as well as allow you to pass on your wealth to loved ones without the need for probate. Through a DST, you can sell high-value assets and reinvest the proceeds to provide you with financial resources to afford long-term care. Having a trustee to manage your trust assets can also eliminate the need to appoint a conservator if mental or cognitive decline renders you unable to handle your financial affairs.

Furthermore, trusts allow you to designate beneficiaries to inherit your wealth without the need to pass those assets through probate, thereby avoiding the time and expense of the probate process and keeping your family’s wealth private and out of the public record, as necessitated by court-supervised probate.

Deferred Sales Trust vs. Other Trust Options: Which Is Best for Incapacity Planning?

Deferred sales trusts are just one of the tools that you could use when planning for incapacity. Others include revocable living trusts and Medicaid trusts. A seasoned attorney from 453 Trust Powered by Pennington Law can sit down with you to discuss your needs, concerns, and goals. We can review your financial and personal circumstances to evaluate your legal options. Armed with this information, we can advise you on what options might be best for you.

Here’s an overview of how three types of trusts might help you achieve your goals:

• Deferred sales trusts: Enable you to defer capital gains tax on asset sales, allowing you to preserve more of your wealth for reinvestment
• Revocable living trusts: Allow you to appoint a trustee to manage your trust property should you become incapacitated
• Medicaid trusts: Designed to help you meet the asset and income limits to qualify for Medicaid benefits for long-term care

Take Control of Your Future — Contact a Deferred Sales Trust Attorney Now

It’s never too soon to start planning for incapacity. Hiring experienced legal counsel can provide you with the legal advice and support you need to develop a tailored, comprehensive legal strategy. Contact 453 Trust Powered by Pennington Law today for a confidential consultation with an incapacity planning attorney. We look forward to discussing how a deferred sales trust can protect your financial interests should you or a loved one become disabled or require long-term care. Don’t wait – reach out today.