iPug trust can meet wide range of estate-planning goals

Brian T. Treacy


iPug trust can meet wide range of estate-planning goals

A valuable tool in the elder law attorney's toolbox is the asset protection trust. In different states they are given various names; ours is called the iPug trust.

Not to get too technical, but "iPug" stands for "Irrevocable Pure Grantor trust." It is a legally acceptable, Medicaid-compliant trust that can be used to hold assets and allow eligibility for the Medicaid or VA benefits available to help pay for assisted living costs or long-term care (aka nursing home) costs.

The iPug uses some components of the traditional revocable living trust and traditional irrevocable trust.

Traditional irrevocable trusts have been typically used for federal estate tax planning purposes when federal estate taxes were imposed on much smaller estates then they are imposed today.

Irrevocable trusts are incredibly onerous and complicated, and force the asset owner to surrender control over those assets placed in the trust. These traditional irrevocable trusts are no longer popular because now federal estate taxes apply only to less than 1 percent of all estates.

A traditional revocable living trust allows you to retain full control over the assets placed in trust and achieves the primary goal of avoiding probate.

The iPug trust is designed to protect your assets from the costs of a nursing home and other creditors. It does not have the restrictions and lack of control that the irrevocable trust has.

In contrast to traditional irrevocable trusts, with the iPug you still maintain the ability to:

  • be the trustee and manage the assets and make all investment decisions;
  • receive all income generated from trust assets;
  • choose and change the asset and investment mix;
  • continue to live in your home and retain homestead property status;
  • direct the sale of your home and the purchase of another within the trust;
  • avoid probate upon death;
  • determine (and change at any time) your death beneficiaries;
  • distribute assets to family members during your lifetime (e.g. help with education costs).

As you can see, the iPug has great flexibility and can meet a wide range of estate-planning goals.

Using the iPug in your estate plan means you get to enjoy the fruits of your labor while protecting them from the costs of nursing home care and the loss to potential creditors (e.g. lawsuits).

Brian T. Treacy is an elder law and estate planning attorney with an office in Bluffton.