A living trust, or a revocable trust, is a powerful tool that you can use as part of you estate plan. While a revocable trust has some limitations, which you need to understand, it also accomplishes certain important goals that you may have for protecting assets and providing for your family.
Determining if you should create a trust, and understanding what type of trust you should create, can be complicated. Mark S. Eghrari & Associates PLLC can provide assistance with the trust creation process. Our legal team can discuss your goals with you, help you to decide if creating a trust is a viable way to accomplish your plans, and assist you in the process of creating a legally valid trust. Give us a call to find out more about the ways in which our legal team can help.
Four Reasons to Create a Living Trust
There are many different reasons why you may wish to create a revocable living trust. Four possible reasons could include:
- Protection of assets in case of incapacity: When you create a revocable living trust, you can serve as the primary trustee. This allows you continued control over assets, which is one of the perks of a revocable trust versus an irrevocable trust. However, you can also name a backup trustee. The backup trustee can take control over the assets that the trust owns as soon as something happens to you. The assets will thus be protected from being lost due to mismanagement. However, you should be aware that the trust assets will still count as resources if you need to qualify for means-tested Medicaid benefits to pay for nursing home care if your incapacitating illness or injury makes it impossible to live alone.
- A faster transfer of assets: When you place assets into a living trust, those assets can transfer outside of the probate process. This is important because probate can take around a year, according to Investopedia. You may not want this long delay in the transfer if assets if you are in a situation where you need a new owner to take possession of assets quickly after your death. You may need a quicker asset transfer so the new owner can assume management responsibilities or so the assets can provide for an heir with financial needs. Whatever the reason, a living trust can facilitate a much faster change in asset ownership after a death.
- Reduced probate costs: The probate process can be expensive. If fewer assets transfer through probate and thus the process is quicker and less complicated, or if you can avoid probate through the use of a revocable trust and other estate planning tools, money can be saved and a more valuable estate can pass on to loved ones.
Enhanced privacy: By making it possible for assets to transfer outside of the probate process, you and your heirs or beneficiaries can have much more privacy than you would if all of your assets were transferred during the probate process. A will is public record, while the trust administration can be done entirely in private in most circumstances unless a problem arises that necessitates going to probate court.
While there are many reasons to create a revocable trust, you should also be aware of the limitations of this kind of trust. A living trust does not generally save any money on estate tax because the assets within the trust are still considered a part of your taxable estate even though they do not transfer through the probate process. Your assets held within the living trust also are not protected from creditor claims or in case you require Medicaid to pay for nursing home care but must spend down your wealth first.
Mark S. Eghrari & Associates PLLC can discuss these limitations and other drawbacks of creating a revocable trust, can provide further information on trust benefits, and can help with trust creation.
Getting Help from A Long Island Trust Lawyer
Mark S. Eghrari & Associates PLLC can discuss with you the requirements of creating a living trust and can help you to determine if the benefits of creating a trust outweigh the costs. We can also discuss options for other kinds of trusts, including an irrevocable trust if such a trust is needed to accomplish your goals.
To find out more about how trusts fit within your estate planning process, download our estate planning checklist. You can also give us a call at (631) 265-0599 or contact us online to talk with a Long Island trust lawyer so you can get personalized advice specific to your situation. Call today so our legal team can begin helping you accomplish your estate planning goals.