A revocable trust is a popular tool used in estate planning. However, many people are not aware of its limitations. While creating a revocable trust can make sense for certain types of asset protection, it does not help with many other issues affecting your assets.
You need to know the rules for different types of trusts as you make your estate plan. It is a good idea to get proper legal help from a wills and trusts lawyer so you can choose the right legal tools to use to protect your assets.
Mark S. Eghrari & Associates PLLC can provide you with the assistance you need to make smart choices for asset protection. Give our Suffolk County estate planning lawyers a call today to find out about how we can help you to make wise use of trusts.
Can a Revocable Trust Protect Assets?
A revocable trust allows you to transfer ownership of assets to a trust, but still to maintain control over the assets. You can change the trust or end the trust at any time.
Because you still own the assets, you get very limited asset protection when you create a revocable trust.
- The assets owned in the trust will still count for determining the value of an estate for federal and state estate tax purposes.
- Creditors can still make claims against you and access the assets held in the revocable trust to pay judgments against you.
- The assets in the revocable trusts will also still count when determining if you can qualify for Medicaid. This means you could end up paying for a nursing home out of pocket, since Medicaid is one of the few insurance providers which pays for nursing home care.
A revocable trust does protect your assets in one important way. You can name a backup trustee when you create your irrevocable trust. If something happens to you, the backup trustee will have authority to take over management of assets owned by the trust. This means you can choose someone who you can count on to immediately begin managing your investments or other property owned by the trust.
The asset protection features of the living trust are essential if you own assets that require careful, hands-on management. You can also make sure that assets will transfer outside of the probate process with a revocable trust, which will mean heirs inherit them sooner. While they’ll still count for estate tax purposes, there won’t be as long of a lag or delay before the new owners can assume ownership.
Alternatives to a Revocable Trust
While a revocable trust serves some important purposes, it fails to protect your assets in other important ways. As a result, you need to make sure that a revocable trust is actually a good option.
You can create other types of trusts, such as a special needs trust or an irrevocable trust, which work differently than a revocable trust. These trusts can have more restrictions on ownership or more requirements for the trust creation process. However, they can do much more for you, like making sure the trust assets won’t count for Medicaid eligibility purposes or allowing you to lave money to someone who is disabled without affecting access to benefits.
You need to know which trusts actually will work best for your situation, since there are different kinds of trusts. You also need to know the specific rules for creating the type of trust you need to provide the protection you are looking for. A trust lawyer can provide a comprehensive explanation of all of the different trust options which you should consider as part of your estate plan.
How a Suffolk County Trust Lawyer Can Help You
Mark S. Eghrari & Associates PLLC will discuss your goals for asset protection and will explain your options. We can assist you in creating a comprehensive estate plan which uses the right types of trusts to achieve your goals.
We provide the advice you need at every step, from deciding whether to make a trust to choosing the type of trust and following legal formalities for trust creation. Our legal team also helps you to fund the trust, and make sure your trustee is doing a good job with looking out for your interests.
You can join us for a free seminar to learn all about the different types of trusts and the different uses for each. You can also give us a call at (631) 265-0599 or contact us online to learn more about how we can assist you with the trust creation process.
- Three Tips to Provide Inheritance Planning Insight - June 11, 2021
- Veterans Pension Can Defray Long-Term Care Costs - June 7, 2021
- How Can a Special Needs Trust Trustee Use the Funds? - June 3, 2021