Many consumers are executing Revocable Living Trusts. They are being sold on this product on the promise to avoid a succession and probate.
Revocable Living Trusts do help the person avoid succession and probate. But, that’s all it does and this benefit may not be as valuable as one might initially think.
Some Revocable Living Trusts are expensive and may cost as much as a small uncontested non-problematic succession. So, the financial benefit that you get, may not be as great as you think.
What is important to remember is what Revocable Living Trusts do not do! Revocable Living Trusts are revocable. This means you can remove any property you put into that trust at any time.
Since you can remove the property from the trust, there is no asset protection. If you owe money, your creditors will be able to seize whatever assets you placed into the trust.
Also, you obtain no tax advantage to creating a Revocable Living Trust. You will continue to pay your taxes the same way you always have paid them.
Finally, placing property in a Revocable Living Trust does not shelter it from government entities for you to pay for your long-term nursing home care. Medicaid and the Veteran’s Administration will count all property placed into a Revocable Living Trust just like you own it. There is a five (5) year look back period for Medicaid and there may also soon be a look back period with the Veteran’s Administration. You may be missing out on an opportunity to shelter your assets while you are healthy by placing your assets into a Revocable Living Trust.
To obtain additional information on legal and innovative estate planning strategies, you should always consult an experienced estate planning attorney.