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Irrevocable trusts are not for everyone. Irrevocable trusts are used to protect assets, or save on taxes. That means that they are usually somewhat complex and must therefore be drafted carefully. While they can be amended in Tennessee, it is not as simple to amend an irrevocable trust as it is to amend a revocable living trust. When there is a need for protection an irrevocable trust is often the best, and only, instrument to accomplish the task.

Trusts for persons with special needs should be irrevocable trusts. A significant reason for this is that trusts which can be amended may well end up being countable assets at a time when qualification for special needs benefits are vital.

Irrevocable trusts are also used for planning for the potential for the need for TennCare long term care benefits. If they are going to be used for TennCare planning the sooner the better. When someone applies for TennCare benefits the gifts made by that person over the last five years are added together and a penalty period is established. The penalty period is the total of all gifts over the last five years divided by how much TennCare pays nursing homes for care. So, with a TennCare penalty divisor of $182.42 per day, gifts totaling $36,484.00 over five years would mean a 200 day period during which the applicant would receive no TennCare benefits to pay for a nursing home. Keep in mind the penalty period begins when the applicant is already in the nursing home and has less than $2,000 in countable assets. In other words, prior planning prevents poor performance.

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