Revocable Living Trust
Perhaps the most common type of trust is the revocable living trust. As the name implies, revocable trusts are fully revocable at the request of the trust maker. Thus, assets transferred (or ‘funded’) to a revocable trust remain within the control of the trust maker; the trust maker (or trust makers if it is a joint revocable trust) can simply revoke the trust and have the assets returned. Revocable trusts can be excellent vehicles for disability planning, privacy, and probate avoidance.
A revocable trust provides no asset protection for the trust maker during his or her life. Upon the death of the trust maker, however, or upon the death of the first spouse to die if it is a joint trust, the trust becomes irrevocable as to the deceased trust maker’s property and can provide asset protection for the beneficiaries, with two important caveats. First, the assets must remain in the trust to provide ongoing asset protection. In other words, once the trustee distributes the assets to a beneficiary, those assets are no longer protected and can be attached by that beneficiary’s creditors. If the beneficiary is married, the distributed assets may also be subject to the spouse’s creditor(s), or they may be available to the former spouse upon divorce.
Irrevocable Life Insurance Trusts
Life insurance is a unique asset in that it serves numerous diverse functions in a tax-favored environment. Life insurance proceeds are received income tax free and, if properly owned by an Irrevocable Life Insurance Trust, life insurance proceeds can also be received free of estate tax.
An Irrevocable Life Insurance Trust (ILIT) is one of the most popular wealth planning devices. It is a trust designed to own a life insurance policy, usually on the lives of you and your spouse. You gift funds to the trust periodically and the trustee uses the funds to pay premiums on the life insurance policy. The trust is designed to produce benefits for your family.
Medicaid Asset Protection Trusts
Planning for the costs of long-term care is a critical component of preserving assets and avoiding potential impoverishment. A Medicaid Asset Protection Trust is an irrevocable trust designed to protect certain assets from being seized by the government for the costs of long-term care. It is important to proactively plan while one is healthy so as to maximize the protection of assets and protect against losing one’s life-savings to the costs of long term care. We would be pleased to answer any questions you may have, and to offer our services to protect you and your loved ones from the devastating effect long term care costs can have without adequate protection.
Veterans Asset Protection Trust
As a living trust attorney accredited by the Veterans Administration to represent veterans, we are proud to assist our country’s servicemen and women in planning for Veterans Pension benefits. A Veterans Asset Protection Trust is designed to preserve assets and obtain assistance for disabled veterans and their surviving spouses who need assistance with activities of daily living. The benefits are available to those who have either a service-connected disability or to those who are over 65 and may need assistance with activities of daily living at home. There are asset and income level restrictions. Please feel free to contact our trust administration attorney for further information.