Safe Harbor Trusts vs Other Trusts

What is the difference between a safe harbor trust and other trusts?

That is one of the basic fundamental things we discuss. A typical trust is a revocable living trust. One of the ways to plan your affairs is to use a revocable living trust. What this trust does is, it allows you to put away the assets you own from your name into the name of the trust, for the purposes of avoiding probate.

The second type of a trust is called a tax trust, or a credit shelter trust. This says that in any community property state, like Washington, between a married couple, the husband and wife will generally own 50% of the assets each.  This type of trust basically says, that when the first spouse dies, instead of leaving the money down for the surviving spouse, their one half, or a portion of it, will go into the credit shelter trust, allowing avoidance of estate sales taxes. This is also a type of a safe harbor trust.

The safe harbor trust that I talk about is much like the credit shelter trust, but it has a different code, title 19. This basically follows the same husband and wife scheme. This money will no longer will be visible for programs such as Medicaid, VA, housing, and food.

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6 Responses to Safe Harbor Trusts vs Other Trusts
  1. Grace Hofer
    December 13, 2009 | 9:41 am

    I am a disabled vet. I have 40% disability 450?, social security 750?, and 800.00 from my husbands teamster trust. Can the VA help with nursing home care or a major surgery plus care? I also have an annuity. What should I do to preserve these for my son?

  2. Dave
    April 7, 2010 | 3:38 pm

    My Mom is living off a trust fund from her father. She is spending interest as well as the body. The trust is closely kept by the bank and dribbled out to her for her rent etc. This and SS is all she has. Can she shelter this trust allowing her to get some government benefits?

  3. Lyle Oliver
    February 10, 2011 | 4:06 pm

    How do I establish a safe harbor trust?

    • Rex Stevens
      February 12, 2011 | 5:45 am

      @lyle Thanks for your interest in a safe harbor trust, just give our office a call at (877) 76-AGING (24464) and we’d be glad to help you with this.

  4. rajiv
    February 14, 2011 | 9:12 am

    Grace: you can certainly protect your assets for your son. But, you will have to do some work. If you are looking at nursing home care relatively soon, then you will have to do planning different than if you have good health about you. Do see a good elder law attorney and he/she can help you. We have three officec that can serve you as well.

    Dave: sounds like your mom may already have a safe harbor trust and if it is not it could be converted to one. And yes, she could get government benefits as the assets in the safe harbor trust will not be considered to be owned by your mom.

    Lyle: easy enough. We need to indentify what assets you own and what assets you would like to put in the trust and then get them transferred. that said, the first issue should be to determine whether or not this is an appropriate estate planning vehicle for you or not. As Rex pointed out, do make an appointment with a qualified elder law attorney and they will give you insight you need.

  5. Jim Tagart
    March 27, 2011 | 4:05 pm

    D o you folks have any liturature I can get to study on what a Safe Harbor Trust is and how to develope one if I think it is appropriate for us?


    Jim Tagart

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