This blog picks up where our previous post, “Top 23 Reasons to Make or Update Your Living Trust, Part 1” left off.
16. You can reward and encourage heirs for making smart life decisions while preventing your estate from depletion by heirs who do not.
You can use a Living Trust to create incentives for heirs to graduate from college, get a job, etc. You can also restrict distribution to heirs who make poor life choices. For example, you can prevent or delay distribution to an heir who has an ongoing problem with substance abuse, and authorize a Trustee to use trust assets to help pay for rehabilitation or treatment.
15. You can prevent or discourage disgruntled heirs or intentionally disinherited family members from challenging your estate plan.
A Living Trust is much more difficult to successfully challenge than a will. You can also insert a No Contest Clause stating that anyone who challenges your estate plan automatically forfeits any inheritance rights he or she may have.
14. You can address varying needs of your children.
Unlike a simple will, you can customize your Living Trust to provide for each of your children in different ways. For example, one child may receive his or her inheritance outright, while another child is to receive inheritance at a certain age, while yet another child’s inheritance is to be indefinitely managed for his or her benefit by a third party.
13. You can shield a portion of your estate if you pass away before your spouse, who then remarries someone else.
You can use your Living Trust to protect a portion of your estate in the event that your spouse remarries or co-habitates with someone else. This prevents your spouse from amending his or her estate plan to leave everything to the new husband or wife, ensuring that your heirs will be provided for.
12. You can ensure that a specific portion of your estate actually goes to your grandchildren, charities, etc.
With a Living Trust, you can guarantee that a specific portion of your estate will be set aside for beneficiaries other than your children. You can also ensure that part of your estate is held in trust for underage beneficiaries until they are old enough and responsible enough to handle the money responsibly themselves.
11. You can provide for “special needs” children and grandchildren (those with disabilities who cannot care for themselves) without sacrificing their eligibility for government benefits.
If someone is receiving SSI or some other income/asset based government benefit, an outright inheritance may disqualify them from the program. With a Living Trust, you can provide for someone with “special needs” without causing them to forfeit their monthly payments and medical care.
10. You can impose discipline on children and/or grandchildren who may not be capable or experienced in managing their own money.
Using a simple will, distributions can only be made outright and immediately. With a Living Trust, you can appoint a Trustee to manage an inheritance for an heir who should not be managing his or her own money when you pass away. Examples of this would be heirs who are underage, irresponsible, unemployed, immature, or substance abusers. Another example which is increasingly common is a child who has filed bankruptcy or has been sued, and whose creditors would legally seize inherited assets.
9. You can plan for long-term care and nursing home costs and become eligible for Medicaid without first spending down all of your assets.
An extended stay in an assisted living facility can cost hundreds of thousands of dollars. Using an Irrevocable Trust, you can guarantee that your hard earned life savings will not be completely wiped out, making sure that there will be something left over for your heirs after you pass away and to make your life more comfortable once you are receiving Medicaid.
Stay tuned for the third and final installment in this series. Don’t forget, you can always request a FREE copy of our full report: “Top 23 Reasons to Make or Update Your Living Trust, Besides Taxes.” Email us at firstname.lastname@example.org.
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- Ohio Medicaid Limits for 2023 - March 14, 2023