One of the hardest things for a child is becoming responsible for their parents' lives. It doesn't happen to all of us, but many people out there will one day find themselves with disabled parents who need to be cared for. If your parents have substantial assets, this becomes even more critical: they need money to pay for their care but, presumably, you and the rest of your family would also like to have an inheritance left.
Setting up some form of asset protection trust for your parents is a good step in ensuring their financial future. Putting their assets in trust helps shield them from being seized to pay for medical expenses, and can often reduce or eliminate inheritance taxes as well. That said, setting up an asset protection trust is tricky. Here are a few things to think about:
Talk to your parents, and be patient. No one likes to be told that they're not able to provide for themselves any more. This is an idea they may have to get used to, and that you'll likely have to bring up several times before it really begins to sink in.
Get a power of attorney. For you to be able to do anything financial on your parents' behalf, like setting up an asset protection trust, they will have to agree to give you the right to make those decisions. As part of your talks, this is something that will need to be discussed closely.
Consider whether a trust makes sense. Houses can be put into trust easily, if their accumulated wealth lies mostly in their primary residence. Other irrevocable trusts can be used to hold their liquid assets while still providing them a small income. If your parents are under 65 and facing disability, a Special Needs trust may be a good choice.
Finally, hire a professional. A lawyer or certified financial planning advisor is going to be your best friend in this process. Go in with your power of attorney and an idea of what you want to accomplish, but listen to their advice on how to best proceed.