Trust

The average probate cost in MN is 3% and takes 12 to 18 months during which time the property must be cared for and taxes, utilities and insurance paid. Property with named beneficiaries does not pass through probate, items such as IRA's, 401K's and life insurance so the main concern is deeded property which in most cases is the house. In order to avoid probate on the house people set up a Revocable Living Trust. John and Mary own their home. They want to pass this home on to their children and not have to go through probate. John and Mary, called the Grantors, set up the trust usually at a cost of a couple thousand. John and Mary are the trustees and their children are the beneficiaries. John and Mary can change this trust at any time including revocation of the trust and that is why it is called a revocable trust. Since they have not given up control of the property it remains in their estate meaning it is subject to Medicaid recovery. If John and or Mary use Medicaid assistance to pay for nursing home expenses Medicaid can sell the house when they die and use the proceeds to reimburse Medicaid. To keep the house safe from Medicaid Recovery they must use an Irrevocable Trust which means they must give up control of the property. This must be done five or more years before either one goes into the nursing home because Medicaid has a five year look back rule and any property removed from the estate during that time is subject to recovery.