Parental Protection Trusts are an option for your elder law clients in cases where traditional irrevocable asset protection trust planning isn’t an option and the best option is to divest themselves of assets by giving them away — usually to children. The children can then use those assets to establish a Parental Protection Trust. Essentially, this type of trust is a third-party special needs planning tactic that is established for the parent’s benefit, with the client’s children being the third party.

When children establish a Parental Protection Trust, it allows them to donate whatever funds they wish into that trust to be set aside for the benefit of the parents. Assets are put into the trust and those funds are preserved until the parent’s death. At that time, any remaining assets are distributed back to the children.

How a life insurance policy fits in

The Veterans Asset Protection Trust can be a beneficial option for many of your elder law clients that are looking for long-term planning options. The Veterans Asset Protection Trust is an intentionally defective grantor trust and can be considered as an option for clients who are wartime Veterans or the surviving spouses of a wartime Veteran. This trust is designed to meet the eligibility requirements from the Veterans Administration (VA) of a complete gift or complete relinquishment.  

When it comes to assets, the most significant for Veterans is typically his or her residence. As long as a Veteran retains that home, it does not count as part of his or her net worth for VA-eligibility purposes and instead qualifies as a “non-countable resource.” If a Veteran is collecting a monthly pension benefit, however, and later sells the home, those proceeds will disqualify him or her from receiving any further Veterans’ pension benefits. This disqualification remains intact until the Veteran spends the proceeds down to an allowable asset level.

Generational differences play a big part in the construction of estate planning strategies, as well as how attorneys should communicate the importance of those strategies to potential clients. In regards to younger generations, much has already been said about Millennials. But, quietly emerging into the marketplace is another demographic—Generation Z. If estate planners are going to continue to evolve their practices in terms of marketing their services to potential clients, then learning about this generation is key.