Revocable living trusts are an important tool that can be used to protect your wealth. However, there are limitations on the ways that a living trust can keep your money and property safe. There are also alternative tools that you might wish to use to provide broader protection — but they involve giving up much more control over your wealth and losing flexibility.
Protecting your property and ensuring that your loved ones can inherit your wealth after you are gone can be a complicated process, and choosing the right trust or asset protection tool can make a huge difference in how financially secure you and your loved ones are.
The Law Office of Michael Robinson, P.C. is here to help you to make use of the legal tools you need to keep your wealth as safe as possible while balancing your need for access. To find out more about how our firm can assist you, give us a call today. You can also read on to learn about what revocable living trusts do — and do not do — in order to protect your wealth.
What Revocable Living Trusts Do
Revocable living trusts can protect your assets during the course of your lifetime by helping you to ensure that a trusted person is able to manage your money and property if you become incapacitated and unable to manage those assets on your own. The assets that you put into the trust can be managed by your backup trustee in the event of your incapacity, so your loved ones won’t have to go to court to have a guardian or conservator named.
Having a guardian appointed takes time and the court might not appoint the person you’d have chosen, and all of this could potentially lead to financially loss. When you’ve transferred assets to a trust and named a backup trustee to take over management of assets when you’re no longer able to do it, you avoid the problems associated with guardianship or conservatorship that could put your wealth at risk.
The creation of a revocable living trust also provides protection for your assets after you pass on. You can ensure your loved ones inherit money and property quickly outside of the probate process. Since the probate process costs money and takes time, substantial loss of the value of an inheritance can occur. The probate process costs around three percent to seven percent of the value of an estate, according to Investopedia. The process can also take around a full year to complete. During that time, there could be financial loss if the assets need to be managed by new owners, rather than just being managed by the executor of an estate.
By creating a revocable living trust to transfer assets through the trust administration process, probate is avoided, the trustee can facilitate the timely transfer of assets, the process will be much more cost-effective, and new owners can immediately take over the management of wealth.
However, there are some ways that revocable living trusts do not protect your wealth. For example, assets held in the trust could still count for purposes of determining if you can qualify for means-tested Medicaid benefits. This means if you need Medicaid to cover nursing home care costs that are not covered by other insurance, you might be unable to get covered because of your trust assets and may have to pay out of pocket. Your assets could also be subject to estate tax and aren’t always protected from creditor claims. That’s why it’s important to talk with an attorney about what type of trust is right for you.
What Revocable Living Trusts Don’t Do
If you are interested in determining if revocable living trusts are the right estate planning tool for you to use, The Law Office of Michael Robinson, P.C. is here to help. We will work closely with you to evaluate all of your options for trust creation and for making use of other asset protection tools to keep your wealth safe and allow you to pass money and property on to loved ones after you are gone. We can also help you to create a legally valid trust document or other documents that you need to protect your assets.
To find out more about how our firm can assist you, join us for a free seminar. You can also give us a call at 585-374-5210 or contact us online today to get your personalized asset protection plans underway.