The revocable living trust is an estate planning device that is ideal for a wide range of different people, but many do not understand the benefits. In this post, we will explain them through the utilization of a hypothetical question and answer session between an inquisitive client and an estate planning attorney.
Trusts are only for wealthy people, right?
This is probably the biggest misconception that is held about estate planning. There are trusts that are used by very high net worth individuals, but a living trust would not be the right choice for them. These trusts are used by informed folks of relatively ordinary means.
Would I lose control of assets that I sign over to a living trust?
No, remember, this is a revocable living trust. If you ever choose to do so, you can revoke the trust entirely and take back direct personal possession of the assets that you conveyed into the trust.
Yes, but doesn’t the trustee make all the decisions?
Absolutely, but guess what? While you are alive and well, you can act as the trustee, and you can also be the beneficiary. Because of this arrangement, you have absolute control in every way.
Can you add or remove assets from a living trust once you have established it?
Of course, you can convey assets into the trust at any time, and you are free to remove them as well. In fact, this is very easily done, especially if you develop a relationship with our firm.
Who can act as the trustee after I pass away?
Any adult that is willing to assume the role that is of sound mind can legally act as a trustee. This being stated, the person should certainly have a good deal of financial acumen, and you should beware of potential conflicts of interest. Longevity should be taken into consideration as well.
If you don’t know anyone that would be suitable, or if you want to be absolutely certain that things are done correctly, you could use a professional fiduciary. Banks and trust companies provide trustee services.
Are assets in a living trust protected if I am ever sued?
No, because the trust is revocable, you would be retaining incidents of ownership. As a result, the assets in the trust would be fair game for the litigant seeking redress. This being stated, there are asset protection trusts, but they would be irrevocable.
How about Medicaid eligibility, are the asset counted by the program if I need coverage to pay for long-term care?
Once again, the answer is no, but you could establish an income only Medicaid trust as an alternative. With this type of trust, you could continue to earn income from the earnings of the trust, but the principal or corpus would not be counted if you apply for Medicaid.
Are the distributions of assets from the trust after my passing subject to probate?
This time we can say no when it is actually a good thing. The trustee that you name in the trust declaration would be empowered to distribute assets to the beneficiaries in accordance with your wishes free of the process of probate.
Attend a Free Estate Planning Workshop!
We shared a little bit of basic information in an easy to understand way in this blog post, and we invite you to take your knowledge to another level at some point in the near future. Our attorneys are holding a series of workshops, and they are chock-full of very useful information.
There is no charge to attend, but we do ask that you register in advance so that we can reserve your seat. To do just that, visit our workshop schedule page and follow the simple instructions.