Category: Revocable Living Trust

RLT can Help with Planning for Incapacity

RLT can Help with Planning for Incapacity

Planning for potential disability and mental incapacity is part of a comprehensive estate plan. Women, in particular, are at a higher risk of becoming disabled, with 44% of women 65 and older having a disability. Most people understand the value of an estate plan. Nevertheless, few know how to that a Revocable Living Trust, or RLT, can help with planning for incapacity, as explained in the article “Incapacity Planning: The Hidden Power Of A Revocable Trust” from Financial Advisor.

Revocable Living Trusts are highly effective tools to protect assets against failing capacity. Although everyone should have both, they can be more powerful and efficient than a financial Power of Attorney. An RLT offers the freedom and flexibility to manage your assets while you can and provides a safety net if you lose capacity by naming a co-trustee who can immediately and easily step in and manage the assets.

Cognitive decline manifests in various ways. Incapacity is not always readily determined, so the trust must include a strong provision detailing when the co-trustee is empowered to take over. It’s common to require a medical professional to determine incapacity. However, what happens if a person suffering cognitive decline resists seeing a doctor, especially if they feel their autonomy is at risk?

Do you need an RLT if you already have a financial Power of Attorney? Yes, for several reasons.

You can express your intentions regarding the management and use of trust assets through the trust. A POA typically authorizes the agent to act on your behalf without specific direction or guidance. A POA authorizes someone to act on your behalf with financial transactions, such as selling a home, representing you and signing documents. The co-trustee is the only one with access to assets owned by the trust, while the POA can manage assets outside of the trust. Having both the POA and RLT is the best option.

Trustees are often viewed as more credible than a POA because RLTs are created with attorney involvement. POAs are often involved in lawsuits for fraud and elder abuse.

Suppose there is an instance of fraud or identity theft. In that case, RLTs provide another layer of protection, since the trust has its own taxpayer ID independent of your taxpayer ID and Social Security number.

Your co-trustee can be the same person as your POA.

Adding a trusted family member as a joint owner to accounts and property provides some protection without the expense of creating a trust. However, it does not create a fiduciary obligation, enforceable by law, for the joint owner to act in the original owner’s best interest. Only POAs or trustees are bound by this requirement.

Once a POA is in place, it is wise to share it with all institutions holding accounts. Most of them require a review and approval process before accepting a POA. Don’t wait until it’s needed, when it will be too late because of incapacity, to have a new one created.

If you know that planning for incapacity is in your family’s future, consider how an RLT can help. Talk with your estate planning attorney about planning to create an RLT and POA to ensure that your assets will be protected in case of incapacity. If you would like to learn more about incapacity planning, please visit our previous posts. 

Reference: Financial Advisor (Oct. 18, 2023) “Incapacity Planning: The Hidden Power Of A Revocable Trust”

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Which Trust, Revocable or Irrevocable?

Which Trust, Revocable or Irrevocable?

Kiplinger’s recent article entitled, “What to Consider When Deciding Between a Revocable and Irrevocable Trust,” explains that, as a legal entity, a trust can own assets such as real estate, brokerage accounts, life insurance, cars, bank accounts and personal belongings, like jewelry. Yet, which trust should you consider, revocable or irrevocable?

You transfer over the title and ownership of these assets to the trust. The instructions state what should happen to that property after you die, including who should receive it and when.

A revocable trust keeps your options open. As the grantor, you can change or revoke the trust anytime. This includes naming a different trustee or beneficiary. This gives you leverage over the inheritance. If your beneficiary doesn’t listen to you, you can still change the terms of the trust. You can also even take your assets back from a revocable trust. There are typically no tax consequences for doing so because only after-tax assets can be placed in a trust while you’re alive.

If a revocable trust seems much like owning the assets yourself, that’s because there’s really little difference in the eyes of the law. Assets in your revocable trust still count as part of your estate and aren’t sheltered from either estate taxes or creditors. However, it’s a smoother financial transition if something happens to you. If you die or can no longer manage your financial affairs, your successor trustee takes over and manages the trust assets according to your directions in the trust documents.

The second reason to have a revocable trust is that the trust assets bypass probate after you die. During probate, a state court validates your will and distributes your assets according to your written instructions. If you don’t have a will, your property is distributed according to state probate law. If you own homes in multiple states, your heirs must go through probate in each one. However, if that real estate is in a revocable trust, your heirs could address everything in your state of residence and receive their inheritance more quickly.

The contents of your revocable trust also remain private and out of bounds, whereas estates that go through probate are a matter of public record that anyone can access.

An irrevocable trust is harder to modify, and even revocable trusts eventually become irrevocable when the grantor can no longer manage their own financial affairs or dies. To change an irrevocable trust while you’re alive, the bar is high but not impossible to overcome. However, assets in an irrevocable trust generally don’t get a step up in basis. Instead, the grantor’s taxable gains are passed on to heirs when the assets are sold. Revocable trusts, like assets held outside a trust, do get a step up in basis so that any gains are based on the asset’s value when the grantor dies.

It is a wise idea to work with an estate planning attorney who will help you consider which trust you should use, a revocable or irrevocable kind. If you would to read more about trusts, please visit our previous posts. 

Reference: Kiplinger (July 14, 2021) “What to Consider When Deciding Between a Revocable and Irrevocable Trust”

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The Estate of The Union Season 3|Episode 5

The Estate of The Union Season 2|Episode 9 is out now!

The Estate of The Union Season 2|Episode 9 is out now!

All good musicians eventually have a Greatest Hits album. We’ve got one too!

We send our blog out most business days and we track which blog entries are the most popular. The posts we did on the new tax rules regarding “Grantor Trusts” and our article on “How to Leave Assets to Minors” were the BIG Winners. Given how popular each of the posts were, we have dedicated an entire episode of our podcast to them.

In this edition of The Estate of the Union, Brad Wiewel expands on both of these topics in a way that makes them a bit easier to understand and perhaps implement.

 

 

In each episode of The Estate of The Union podcast, host and lawyer Brad Wiewel will give valuable insights into the confusing world of estate planning, making an often daunting subject easier to understand. It is Estate Planning Made Simple! The Estate of The Union Season 2|Episode 9 is out now! The episode can be found on Spotify, Apple podcasts, or anywhere you get your podcasts. If you would prefer to watch the video version, please visit our YouTube page. Please click on the links below to listen to or watch the new installment of The Estate of The Union podcast. We hope you enjoy it.

The Estate of The Union Season 2|Episode 4 – How To Give Yourself a Charitable Gift is out now!

 

Texas Trust Law focuses its practice exclusively in the area of wills, probate, estate planning, asset protection, and special needs planning. Brad Wiewel is Board Certified in Estate Planning and Probate Law by the Texas Board of Legal Specialization. We provide estate planning services, asset protection planning, business planning, and retirement exit strategies.

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Complexities of Determining Who is a Descendant

Complexities of Determining Who is a Descendant

Not using specific names and terms open to definition could significantly impact who might inherit from your estate or trust. The complexities of determining who is a descendant can make beneficiary distribution more difficult. There are situations where some people may choose to deliberately restrict or expand the definition of the group, which might be included in these definitions, explains the article “Who Is Your Descendant: Intentional Limitations Or Broadening Of Definitions In Your Will Or Trust” from Forbes. For some people, creating a new role of a special trust protector who holds a limited or special power of appointment to determine who should be included or removed from the definition of “issue” or descendant is worth considering.

What might arise if the wish only considers children descendants if they belong to a particular faith? Is this type of legal restriction permitted? Clauses limiting heirs to members of a particular faith or a sect within the faith may raise questions about the constitutionality of the clause. Potential heirs excluded under such provisions have argued that a religious restriction on marriage violates constitutional safeguards under the Fourteenth Amendment protecting the right to marry.

Courts have held clauses determining if potential beneficiaries qualify for distributions based on religious criteria enforceable, if the potential beneficiaries have no vested interest in the assets. Another court upheld the provisions of a will conditioning bequests to their sons as long as they married women of a particular faith.

These decisions are narrowly tailored to the specific fact patterns of the cases, since individuals are generally allowed to disinherit an heir with the exception of a spousal elective share or a community property interest. The courts have reasoned that the restriction is not on the heir to marry but on the right of the testator to bequeath property as they wish.

An alternative approach to addressing the complexities of determining who is a descendant is to create a single trust for all heirs, mandating the funds in the trust be used for the cost of religious education, attending religious summer camps, taking relevant religious studies, religious institutional membership, etc. The trust could use the assets to encourage religious observance. However, it may only partially address the question. What about the remainder of the assets—should it be used for all heirs regardless of religious affiliations?

An estate plan compliant with Islamic law may involve a different determination of who is a descendant. The Sharia laws of inheritance are similar to the intestacy statute. One-third of the estate may be distributed as the decedent wishes. However, the remainder must be distributed as mandated under Islamic law. The residuary inheritance shares after the first third are restricted to Muslim heirs. Additional laws prescribe specified shares of the estate to be distributed to certain heirs, depending upon which heirs are living at the moment of the decedent’s death.

Suppose you or a family member is lesbian, gay, bisexual, transgender, or queer (LGBTQ). The law may not address the unique considerations regarding who may be considered a descendent. Special steps may be needed to carry out your wishes as to who your descendants are. What if you view a particular child as your own, but share no genetic material with a child? Children may be adopted or born through surrogacy, so neither parent nor only one parent is biologically related to the child. While some states may recognize an equitable parent doctrine, this may be limited and not suffice to protect the testator.

The many new complexities of determining who is a descendant are complicated and evolving. Changing family structures and religious beliefs based on different values all impact estate planning. A special trust protector may make decisions when uncertainty arises from provisions in a will designed to carry out the wishes. This is a relatively new role and not permitted in some states, so speak with your estate planning attorney to protect your wishes and heirs. If you would like to learn more about beneficiary designations, please visit our previous posts. 

Reference: Forbes (Aug. 4, 2023) “Who Is Your Descendant: Intentional Limitations Or Broadening Of Definitions In Your Will Or Trust”

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Pour-Over Will can be Extremely Valuable in your Estate Plan

Pour-Over Will can be Extremely Valuable in your Estate Plan

The pour-over will can be extremely valuable in completing your estate plan. You may have come across the term “pour-over” will in a conversation with an estate planning attorney, especially as it relates to revocable living trusts. When written alongside a revocable living trust, a pour-over will ensures that certain unallocated assets will be, in the end, accounted for, according to a recent article, “4 Concepts You May Be Getting Wrong About Pour-Over Wills” from The Street.

Assets not already transferred to a trust during your life will be transferred or “poured over” into the trust after going through probate after your death.

Probate is the court-supervised legal process used to verify your will and appoint an executor to handle estate affairs.

The goal of the pour-over will is to provide a safety net for any imperfections or oversights during the estate planning process. They are popular for this reason. However, they are also poorly understood and often incorrectly used. Here are four key misconceptions and mistakes to be aware of.

Pour-over wills are unnecessary if you have a revocable living trust. Not true. Many people make the mistake of thinking they don’t need a pour-over will because of their revocable living trust. However, this is wrong. Very few people are as diligent about updating their trusts as they need to be and often die without finalizing the transfer of all assets into their trust. People also simply forget to make transfers. The pour-over will solves this problem.

The executor doesn’t matter because I’m going to fully fund my revocable living trust. Wrong again!  Life often gets in the way of the best of intentions. For example, if you have a large digital asset, like crypto, and completely forget to transfer it into your trust, your executor will be in charge of it. As an aside, you’ll want your executor to be someone knowledgeable about crypto and finances.

I have a living trust and pour-over will. I’m done with estate planning. This would be like saying you had your car washed and won’t ever have to wash it again. The pour-over will takes assets left in your name and moves them into your trust after your passing. The pour-over is a safety net. However, it’s still got to be kept current. Estate planning attorneys recommend a review of your plan every three to five years or whenever there’s a trigger event, like death, divorce, or remarriage. A trust-based estate plan needs to be reviewed every time a new asset is acquired.

There’s no need to do anything in the event the living trust hasn’t been set up when I pass because of the pour-over will. Wait, what? Not true. It’s always possible the disposition of assets into the trust could be invalid or inoperative. To be sure, name the same beneficiaries as presently provided in the trust agreement as contingent beneficiaries in your pour-over will. This will ensure that your objectives are realized, even if somehow a defect in the trust instrument invalidates the intended transfer.

The pour-over will can be extremely valuable in completing your estate plan. However, it still requires reviewing every three to five years to avoid any problems. Talk with your estate planning attorney to see how this can work to strengthen the rest of your estate plan. If you would like to read more about trusts, please visit our previous posts. 

Reference: The Street (June 14, 2023) “4 Concepts You May Be Getting Wrong About Pour-Over Wills”

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What is the Purpose of a Blind Trust?

What is the Purpose of a Blind Trust?

One type of trust offers a layer of separation between the person who created the trust and how the investments held in the trust are managed. The trust’s beneficiaries are also unable to access information regarding the investments, says the article “What is a Blind Trust?” from U.S. News & World Report. What is the purpose of a blind trust?

The roles involved in a blind trust are the settlor—the person who creates the trust, the trustee—the person who manages the trust—and beneficiaries—those who receive the assets in a trust.

Blind trusts, typically created to avoid conflicts of interest, are where the settlor gives an independent trustee complete discretion over the assets in the trust to manage, invest and maintain them as the trustee determines.

This is quite different from most trusts, where the owner of the trust knows about investments and how they are managed. Beneficiaries often have insight into the holdings and the knowledge that they will eventually inherit the assets. In a blind trust, neither the beneficiaries nor the trust’s creator knows how funds are being used or what assets are held.

Blind trusts can be revocable or irrevocable. If the trust is revocable (also known as a living trust), the settlor can dissolve the trust at any time.

If the trust is irrevocable, it remains intact until the beneficiaries inherit the entire assets, although there are some exceptions.

In some instances, irrevocable trusts are used to move assets out of an estate. Settlors lose control over the holdings and may not terminate the trust or change the terms.

Blind trusts can be used in estate planning if the settlor wants to limit the beneficiaries’ knowledge of the trust assets and their ability to interfere with the management of the trust.’

People who win massive lump sums in a lottery might use a blind trust because some states allow lottery winners to preserve their anonymity using this type of trust. They draft and sign a trust deed and appoint a trustee, then fund the trust by donating the winning ticket to the trust prior to claiming the prize. By remaining anonymous, winners have some protection from unscrupulous people who prey on lottery winners.

One drawback to a blind trust is the lack of knowledge about how investments are being handled. The blind trust also poses the issue of less accountability by the trustee, since beneficiaries have no right to inspect whether or not assets are being managed properly.

Do you need a blind trust? Speak with an experienced estate planning attorney to discuss what the purpose of a blind trust is, and whether or not your estate would benefit from it. If you want to separate yourself from investment decisions or would rather beneficiaries don’t know about the holdings, it might make sense. However, if you have no concerns about privacy or conflict of interests, other types of trusts may make more sense. If you would like to learn more about trusts, please visit our previous posts. 

Reference: U.S. News & World Report (June 1, 2023) “What is a Blind Trust?”

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Avoid Unintended Consequences with your Planning

Avoid Unintended Consequences with your Planning

The mistake can be as simple as signing a document without understanding its potential impact on property distribution, failing to have a last will and testament properly executed, or expecting a result different from what the will directs. Unfortunately, these unintended consequences are relatively common, says the article “Advice for avoiding unintended issues in estate planning” from The News-Enterprise. You can avoid unintended consequences with your planning by working with an estate planning attorney.

The most common mistake that leads to unintended consequences is leaving everything to a spouse in a blended family. Even if children don’t have a close relationship with their stepparent, they’re willing to get along for the sake of their biological parent. However, when the first spouse dies, the decedent’s beneficiaries are generally disinherited if the surviving spouse receives the entire estate.

If the family truly has blended and maintains close relationships, the surviving spouse may ensure that the decedent’s children receive a fair share of the estate. However, if the relationships are tenuous at best, and the surviving spouse changes their will so their biological children receive everything, the family is likely to fracture.

Using a revocable living trust as the primary planning tool is a safer option. An experienced estate planning attorney can create the trust to allow full flexibility during the lifetime of both spouses.  Upon the first spouse’s death, part of the estate is still protected for the decedent’s intended beneficiaries.

This way, the surviving spouse has full use of marital assets but can only change beneficiaries for his or her portion of the estate, protecting both the surviving spouse and the decedent’s intended beneficiaries.

Another common mistake occurs when married couples execute their last will and testaments with different beneficiaries. For example, if they’ve named each other as the primary beneficiary, only the survivor will have property to leave to loved ones.

An alternative is to decide what the couple wants to happen to the estate as a whole, then include fractional shares to all beneficiaries, not just the one spouse’s beneficiaries. This protects everyone.

Many people assume that if they die without a will, their spouse will inherit everything. Unfortunately, this is not always the case, and a local estate planning attorney will be able to explain how your state’s laws work when there is no will. Children or other family members are often entitled to a share of the estate. This may not be terrible if the family is close. However, if there are estranged relationships, it can lead to the wrong people inheriting more than you’d want.

Failing to plan in case an heir becomes disabled can cause life-altering problems. If an heir develops a disability and receives government benefits, an inheritance could make them ineligible. The problem is that we don’t know what state of health and abilities our heirs will be in when we die, and few will want their estate to be used to reimburse the state for the cost of care. A few extra provisions in a professionally prepared estate plan can result in significant savings for all concerned.

Estate planning is about more than signing off on a handful of documents. It requires thoughtful consideration of goals and potential consequences. Can every single outcome be anticipated? Not every single one, but certainly enough to be worth the effort. You can avoid unintended consequences with your planning by working with an experienced estate planning attorney. If you would like to learn more about mistakes in your estate planning, please visit our previous posts. 

Reference: The News-Enterprise (March 25, 2023) “Advice for avoiding unintended issues in estate planning”

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Protecting Assets with a Trust vs. LLC

Protecting Assets with a Trust vs. LLC

While trusts and Limited Liability Companies (LLCs) are very different legal vehicles, they are both used by business owners to protect assets. Understanding their differences, strengths and weaknesses will help determine whether protecting assets with a trust vs a LLC is best for your situation, as explained by the article “Trust Vs. LLC 2023: What Is The Difference?” from Business Report.

A trust is a fiduciary agreement placing assets under the control of a third-party trustee to manage assets, so they may be managed and passed to beneficiaries. Trusts are commonly used when transferring family assets to avoid probate.

A family home could be placed in a trust to avoid estate taxes on the owner’s death, if the goal is to pass the home on to the children. The trustee manages the home as an asset until the transfer takes place.

There are several different types of trusts:

A revocable trust is controlled by the grantor, the person setting up the trust, as long as they are mentally competent. This flexibility allows the grantor to hold ownership interest, including real estate, in a separate vehicle without committing to the trust permanently.

The grantor cannot change an irrevocable trust, nor can the grantor be a trustee. Once the assets are placed in the irrevocable trust, the terms of the trust may not be changed, with extremely limited exceptions.

A testamentary trust is created after probate under the provisions of a last will and testament to protect business assets, rental property and other personal and business assets. Nevertheless, it only becomes active when the trust’s creator dies.

There are several roles in trusts. The grantor or settlor is the person who creates the trust. The trustee is the person who manages the assets in the trust and is in charge of any distribution. A successor trustee is a backup to the original trustee who manages assets, if the original trustee dies or becomes incapacitated. Finally, the beneficiaries are the people who receive assets when the terms of the trust are satisfied.

An LLC is a business entity commonly used for personal asset protection and business purposes. A multi-or single-member LLC could be created to own your home or business, to separate your personal property and business property, reduce potential legal liability and achieve a simplified management structure with liability protection.

The most significant advantage of a trust is avoiding the time-consuming process of probate, so beneficiaries may receive their inheritance faster. Assets in a trust may also prevent or reduce estate taxes. Trusts also keep your assets and filing documents private. Unlike a will, which becomes part of the public record and is available for anyone who asks, trust documents remain private.

LLCs and trusts are created on the state level. While LLCs are business entities designed for actively run businesses, trusts are essentially pass-through entities for inheritances and to pass dividends directly to beneficiaries while retaining control.

Your estate planning attorney will be able to judge whether protecting your assets with a trust vs an LLC is the best option for you. If you own a small business, it may already be an LLC. However, there are likely other asset protection vehicles your estate planning attorney can discuss with you. If you would like to learn more about business planning, please visit our previous posts. 

Reference: Business Report (April 14, 2023) “Trust Vs. LLC 2023: What Is The Difference?”

 

Revocable Trusts Must Be Funded to be Effective

Revocable Trusts Must Be Funded to be Effective

Revocable assets simplify asset management during life and facilitate private asset transfers at death. Therefore, you might think your estate planning is done when you sign the revocable trust agreement. Nevertheless, it’s not done until you fund the trust, advises a recent article, “’It Ain’t Over ‘Til It’s Over’ – Use of a Funded Revocable Trust in Estate Planning” from The National Law Review. Remember, revocable trusts must be funded to be effective.

A trust is a legal agreement allowing one person—the trustee—to hold and manage property to benefit one or more beneficiaries. The person who creates the trust—the grantor—can create a trust during their lifetime and modify or terminate the agreement at any time. The grantor is the initial trustee and the initial beneficiary. These dual roles allow the grantor to control the trust assets during their lifetime.

Upon death, the revocable trust becomes irrevocable. The trust agreement directs the distribution of assets and appoints the trustee to manage and distribute assets. Unlike a will, the revocable trust works during your lifetime to hold assets.

Funding the trust is critical for it to perform. Assets must be transferred, with an asset-by-asset review conducted to determine which assets should go into the trust. The assets should then be transferred—usually by title or deed changes—which your estate planning attorney can help with.

A funded revocable trust avoids having the assets go through probate. State statutes and regulations require several steps to be completed, adding time, effort and cost to estate administration. Suppose that the revocable trust at death owns the assets. In that case, the trust owns the legal title to the assets, and assets can be distributed to beneficiaries without court intervention.

Avoiding probate also reduces expenses. The expense of probate administration arises from two sources: probate fees and attorney fees. These vary by state and jurisdiction. However, they can add up quickly. A funded revocable trust minimizes both types of fees.

Unlike the will, which becomes a public document once it goes through probate, revocable trust assets and beneficiaries remain confidential, known only to the trustee and beneficiaries. Anyone who wants to can request and review your will and obtain information about assets and beneficiaries. However, the trust is a private document, protecting your loved ones from scammers, overly aggressive salespeople, and nosy relatives.

Privacy can be essential for business owners. For example, suppose you die owning a business interest as an individual. In that case, the description and value of business interests must be reported on the public record during the probate process and is available to potential purchasers to use as leverage against your estate. Transferring business interests to a revocable trust during your lifetime can keep that information private.

Trusts are also used for asset protection for assets with beneficiary designations, including life insurance, IRAs and retirement plans. For instance, if a life insurance policy is paid to your estate, creditors of your estate may have access to the proceeds. If it is paid to the trust, it is protected from creditors. A Revocable trust is only as good as its funding. Revocable trusts must be funded to be effective. If you would like to learn more about RLTs, please visit our previous posts. 

Reference: The National Law Review (March 3, 2023) “’It Ain’t Over ‘Til It’s Over’ – Use of a Funded Revocable Trust in Estate Planning”

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Better to have a Revocable or an Irrevocable Trust?

Better to have a Revocable or an Irrevocable Trust?

Is it better to have a revocable or irrevocable trust? It’s not always obvious which type of trust is the best for an individual, says a recent article titled “Which is Best for Me: Trusts” from Westchester & Fairfield County Business Journals.

In a revocable living trust (RLT), the creator of the trust, known as the “grantor,” benefits from the trust and can be the sole Trustee. While living, the grantor/trustee has full control of the real estate property, bank accounts or investments placed in the trust. The grantor can also amend, modify and revoke the trust.

The goal of a revocable trust is mainly to avoid probate at death. Probate is the process of admitting your last will and testament in the court in the county where you lived to have your last will deemed legally valid. This is also when the court appoints the executor named in your last will. The executor then has access to the estate’s assets to pay bills and distribute funds to beneficiaries as named in the last will.

Probate can take six months to several years to complete, depending upon the complexity of the estate and the jurisdiction. Once the estate is probated, your estate is part of the public record.

A revocable living trust and the transfer of assets into the trust can accomplish everything a last will can. However, distribution of assets at the time of death remains private and the court is not involved. Distribution of assets takes place according to the instructions in the trust.

By comparison, irrevocable trusts are not easily revoked or changed. Most irrevocable trusts are used as a planning tool to transfer assets for the benefit of another person without making an outright gift, or for purposes of Medicaid or estate tax planning. An Irrevocable Medicaid Asset Protection Trust is used to allow an individual to protect their life savings and home from the cost of long-term care, while allowing the trust’s creator to continue to live in their home and benefit from income generated by assets transferred into the irrevocable trust.

The grantor may not be a trustee of an irrevocable trust and the transfer of assets to a Medicaid Asset Protection trust starts a five-year penalty period for Nursing Home Medicaid and a two-and-a-half-year penalty period for Home Care Medicaid for applications filed after March 1, 2024. After the penalty (or “look back”) periods expire, the funds held by the trust are protected and are not considered countable assets for Medicaid.

An irrevocable trust can also be used to transfer assets for the benefit of a loved one, friend, child, or grandchild. Assets are not controlled by the beneficiaries but can be used by the trustee for the beneficiary’s health, education, maintenance and support.

Trusts are used to reduce the size of the taxable estate, to plan for the well-being of loved ones, and to protect the individual and couple if long-term care is needed. Whether it is better to have a revocable or an irrevocable trust depends a lot on your own circumstances. Speak with an estate planning attorney about which trust is best for your unique situation. If you would like to learn more about trusts, please visit our previous posts. 

Reference: Westchester & Fairfield County Business Journals (Jan. 26, 2023) “Which is Best for Me: Trusts”

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Information in our blogs is very general in nature and should not be acted upon without first consulting with an attorney. Please feel free to contact Texas Trust Law to schedule a complimentary consultation.
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