Revocable Living Trusts

Living and revocable trusts are used for a variety of reasons like avoiding probate, asset management in the event of incapacitation, and flexibility.  The main reason a grantor may be interested in a revocable trust is to retain rights over his/her assets.  There are many different legal considerations when it comes to revocable trusts and the language of the document itself is critical to the proper distribution of assets and protection of the beneficiaries.

Since the state and federal Medicaid programs have strict requirements that pertain to trusts, it is crucial to consider all details to avoid getting disqualified for Medicaid.

There are many advantages and disadvantages to using a revocable trust.  Below are a few of the advantages of revocable trusts:

  • •Grantor can change or end the rust at any time as long as he/she is mentally competent.

  • •Grantor has financial flexibility in case a situation arises that access to one’s assets becomes necessary like an illness or other emergencies.

  • •Avoidance of probate is one of the most common reasons that people are interested in revocable living trusts.  However, any property or assets that are not a part of the trust at death are still subject to probate even if there is a pour-over will that transfers other assets after death.

  • •Revocable trusts ensure that the beneficiaries have access to the assets without having to go through probate after the grantor’s death.

Below are a few of the disadvantages of revocable trust:

  • •Since the grantor still has access to and control over his/her assets, Medicaid can have access to them in certain situations.  Also, Medicaid has strict regulations on trusts that can effect an individual’s ability to qualify for the service.

  • •There are no tax protection benefits for beneficiaries.

  • •There is no asset protection against potential lawsuits.

  • •There are no wealth preservation benefits.

  • •Does not protect against creditors’ claims after death.

  • •Does not eliminate the need for a will.

Just like with any huge life decision, drafting a trust requires attention to detail and a clear plan of asset distribution to beneficiaries.  To make sure that your wishes are carried out in the event of death, it is important to consult with an attorney to make sure that all of the language in the document reflects the intent of the grantor. We look forward to working with you to find the best trust solution for your specific situation.

Revocable Living Trusts Resources

Revocable Living Trusts Attorneys

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