If you are looking for a trust lawyer in Loveland, OH, you have landed in the right place. We proudly serve this very special place, and we greatly value the relationships with locals that we have built over the years.
Some people are aware of the fact that there are different types of trusts that can be used to satisfy specific objectives. With this in mind, we will provide an overview of this post.
Irrevocable Trusts
The first thing you should understand about trusts is the matter of revocability. There are some trusts that cannot be revoked, and there are revocable trusts, and they serve different purposes.
When you have an irrevocable trust, you “surrender incidents of ownership” in a legal sense. This means that you no longer own the assets that you have transferred to the trust. They are the property of the trust, and they are controlled by the trustee.
Why would you want to establish a trust that you cannot revoke if something happens, and you want to change your mind? One reason why you may want to use an irrevocable trust is to develop a financial profile that will lead to future Medicaid eligibility.
Medicare does not pay for a stay in a nursing home, and it does not cover in-home care that is provided by professional health aide. Nursing facilities and in-home caregivers are extremely expensive, and these bills could consume the inheritances that you want to leave to your children.
Medicaid does cover long-term care if you can gain eligibility, but there is a $2000 asset limit. If you convey assets into an irrevocable trust, you surrender incidents of ownership, and they would not be counted if you apply for Medicaid.
You could accept distributions of the trust’s earnings until and unless you do in fact apply for Medicaid coverage. Advance planning is the key to the successful execution of the strategy, because the trust must be funded at least five years before you submit your application.
The federal estate tax is a big deal for high would net worth individuals because it carries a 40 percent top rate. It is only relevant to multimillionaires because it only applies to the portion of an estate that exceeds $12.06 million in value.
If your estate is going to be subject to this tax, assets that you convey into an irrevocable trust would no longer be part of your estate for tax purposes. There are a number of different tax efficiency trusts that facilitate transfers at tax discounts.
These are a couple of the reasons why people use irrevocable trusts, and there are a number of others.
Revocable Living Trust
The trust that is most commonly recommended by Loveland, OH trust attorneys is the revocable living trust. As the name would indicate, you can in fact revoke or rescind the trust at any time, and you will act as the trustee while you are living.
You retain incidents of ownership, so this type of trust would not be useful if you are concerned about the estate tax or Medicaid eligibility. One of the major benefits is the streamlined estate administration.
If you use a will to state your final wishes, it would be admitted to probate, which is a costly and time-consuming legal process. Assets that are held by a living trust are distributed to the beneficiaries outside of probate.
You can include spendthrift protections when you have a living trust. It will become irrevocable after you are gone, and the principal will be out of the reach of the beneficiary’s creditors. The trustee that succeeds you can be instructed to distribute limited assets on an incremental basis.
This will prevent reckless spending and poor financial decision making. When you draw up the trust agreement, you can allow for larger distributions when the beneficiaries reach certain age thresholds if you choose to do so.
Take Action Today!
Our doors are open if you are ready to work with a Loveland, OH trust lawyer to put a plan in place. You can send us a message to request a consultation appointment, and we can be reached by phone at 513-721-1513.
- What You Need to Know about Planning for Elder Care - March 21, 2023
- Can a Trust Be Contested? - March 16, 2023
- Ohio Medicaid Limits for 2023 - March 14, 2023
