Irina Yadgarova
Bukharian families prioritize family and providing for their children. As we fled from the Soviet Union, we worked hard to ensure a brighter future for our children. During that process, many of us were able to purchase a primary residence, or in some instances, even investment properties. While busy with adjusting to a new country, work, and paying down mortgages—estate planning was not high on the agenda. But today, more than ever, I urge our incredible community to make sure that they take steps to protect the wealth and real estate they acquired through genuine grit and hard work.
If you own a home and have adult children, it makes sense to transfer it to an irrevocable trust—a type of trust that helps protect assets and reduces federal estate taxes. This is especially so for our tight-knit community where most parents have close relationships with their children and want to make sure that the children inherit their property without a court process and without the reach of creditors. If you own a home and have Medicaid, it is even more imperative that it be transferred to a trust because Medicaid must recover against your home for the expenses it paid on your behalf during your lifetime.
As you may be aware, the major benefits of an irrevocable asset protection trust are that it protects your home(s) from creditors, avoids a court process when you pass away (e.g. your named beneficiaries inherit automatically), and also enable the process of becoming potentially eligible for Medicaid should you need some type of long term care or other expensive medical coverage in the future.
What are the downsides? For younger folks, an irrevocable trust would usually not make much sense because they are hard pressed to find a trustee as their children are still young. This is not the case for older individuals who do have trustworthy, adult children. Similarly, when we are young, we don’t know exactly how we will fare economically upon retirement. It is possible that we may need to sell our home(s), downsize and supplement our retirement income. Once we are close or past retirement, this is no longer the case. Lastly, if there is a mortgage that you want to refinance, the refinancing should be done before you establish an irrevocable trust. Therefore, for most older individuals with trustworthy families, I see virtually no downside to transferring property to an irrevocable trust.
So how exactly does the trust work? If we are talking about a home, or multiple homes, transferred to the trust, you would continue to have the right to live there, any and all tax breaks (eg. the Senior Citizen Homeowner’s Exemption- SCHE, STAR, etc.) would remain protected, and you can even retain the right to your rental incomes. For tax purposes, the home(s) would continue to be owned by you so your tax and mortgage obligations would remain unchanged. You would also continue to pay for any and all property expenses. If you would like to sell the home(s) during your lifetime, your designated trustee would sign the contract of sale and put the proceeds into a trust account. The trustee can then use these proceeds to purchase other real estate or investments through the trust. Another facet of the irrevocable trust is that you will even maintain the right (on your own—without the trustee) to change your beneficiaries among your children, grandchildren, and other family members, or even a charity.
Therefore, consider this incredible vehicle—the irrevocable asset protection trust—to provide for your family upon your passing in the most ideal fashion. If you worked hard for your children during your lifetime, it makes sense to take the next step and make sure they are appropriately provided for upon your passing.
May our Bukharian community continue to prosper and see the success of our offspring! Am Yisrael Chai!