As Loveland OH trust lawyers, we find that clients have many of the same questions, so we have an understanding of their areas of concern. With this in mind, we are going to share a hypothetical conversation with a trust attorney in this post.
Aren’t trusts only for wealthy people?
This is a very commonly held misconception, but the answer is no. High net worth individuals with multi-generational wealth that are exposed to estate taxes certainly use trusts, but there are different types of trusts.
There are also trusts that are useful for ordinary people that have legacies that they are going to be passing along to their loved ones.
Can you change your mind and dissolve a trust after it has been created and funded?
It depends on the type of trust that you have established. There are revocable trusts, and there are also irrevocable trusts.
Why would you use an irrevocable trust if you have another option?
There are some reasons why people want to transfer assets out of their own names. If you are a wealthy person with estate tax exposure, you would use an irrevocable trust to reduce the value of your estate. Wealth preservation irrevocable trusts facilitate transfers at tax discounts.
An irrevocable trust can also protect assets from litigants, and you can use this type of trust as part of a nursing home asset protection strategy. Over one third of seniors will eventually reside in nursing facilities, and Medicare does not cover a stay in a nursing home.
Medicaid will absorb the cost if you can gain eligibility, but you cannot qualify if you have more than $2000 in countable assets in your name. Assets that have been conveyed into an irrevocable trust would not be counted by Medicaid.
A qualified terminable interest property (QTIP) trust is an irrevocable trust that can be used if you are getting remarried as a parent. Your surviving spouse will receive distributions of the earnings if you die first, but they would not be able to change the terms of the trust.
After their passing, your children would inherit the assets that remain in the trust. As you can see, there are a number of very good reasons why people use irrevocable trusts.
What are the benefits of a revocable trust?
The revocable living trust is actually the most commonly used estate planning device outside of a simple will. Since you can revoke the trust and take back direct personal possession of the assets, resources in the trust will count if you apply for Medicaid, and they would be part of your estate.
While you are alive, you would act as the trustee, and creditors would be able to reach assets in the trust. However, this type of trust can serve other very important and useful purposes.
If you state your final wishes in a simple will, it would be admitted to probate. This is a costly and time-consuming public legal process, so anyone that is interested can find out how you planned your estate.
Asset distributions through the terms of a living trust are not subject to probate, and the consolidation of asset ownership will help streamline the administration process. You can include a spendthrift clause, and the trust will become irrevocable after your death.
At that point, the beneficiary’s creditors would not be able to touch assets that are held by the trust. You can include spending safeguards by instructing the trustee to provide limited distributions incrementally over an extended period of time.
While you are living, you can adjust the terms, and a married couple could have a shared living trust. This is a good choice if you and your spouse own a lot of property jointly and you intend to leave your respective interests in the property to one another.
Schedule a Consultation Today!
If you are ready to work with a Loveland OH trust lawyer to put a plan in place, you can call us at 513-721-1513 to schedule a consultation. There is also a contact form on this site you can use if you would prefer to send us a message.