Asset protection is important to some individuals for one reason or another. There are certain lines of work that leave people open to legal actions, and shielding resources from the disgruntled former spouse of a family member can be another concern. Some people hear about Huntersville revocable trusts and make some sweeping assumptions. While these trusts are valuable on a number of levels it is important to understand that if you can revoke a trust, it does not provide asset protection during your lifetime. Let our Huntersville trust lawyers help you with proper asset protection.
Why Don’t Huntersville Revocable Trusts Deliver Asset Protection?
Most people who establish a revocable living trust will act as both the trustee and the beneficiary. By doing this, they keep complete control of the assets in the trust. The grantor of the trust may also dissolve it or alter the terms at any time. Since the grantor has complete freedom to do whatever he or she wants with the resources in the trust, they are not protected from interested parties trying to get to the personal property of the grantor.
Medicaid and Huntersville Revocable Trusts
Some people have misconceptions about Medicaid and revocable living trusts as well. Many seniors pay for long-term care with Medicaid since Medicare won’t pay for an extended stay in an assisted living facility. You must stay within a modest upper resource limit to qualify for the program. Therefore, individuals sometimes look for ways to divest themselves of assets in advance of applying for Medicaid. Placing resources into Huntersville revocable trusts will not help because as explained above you are retaining incidents of ownership. Because of this, the assets that you placed into the trust would be counted against you by the Medicaid program — Medicaid would expect you to spend them on care. For assets to be excluded by Medicaid, they would have to be in an irrevocable trust — one you can’t amend or revoke.
Can Huntersville Revocable Trusts Protect a Spendthrift Heir?
A revocable living trust does provide you with a great deal of control when you are planning your estate, though. In the trust declaration, you name a successor trustee and you name a beneficiary or beneficiaries upon your death.
The successor trustee that you name follows the instructions that you give in the trust declaration. This gives you with the ability to protect a spendthrift heir from his or her poor money management habits.
For example, let’s say that you have one son that you want to provide for after your passing. Your son is a great person, but not good with money. He has come to you on many occasions over the years for financial assistance.
You are concerned about your son’s needing help after you die. If he receives a direct inheritance, he may be okay for a while; but he will probably burn through that inheritance quickly. Down the line, he may be in a very difficult position, and you would not be around to help.
To protect him, you could instruct the trustee to distribute the earnings of the trust to your son on a monthly basis. You could also give the trustee the discretion to distribute more if your son experiences hardships. Perhaps you could allow your son to receive larger lump-sum distributions when he reaches certain ages. You have a lot of flexibility in how you provide for your son. If you have any questions, let our Huntersville trust lawyer know.
Other Benefits of Using Huntersville Revocable Trusts
A living trust can be a good choice as an asset transfer vehicle, even if you are not extraordinarily wealthy. If you would like to learn more about living trusts, download our special report. This report is free. If you would like to take things a step further, we would be glad to assist you. Our Huntersville trust lawyer would be happy to sit down with you for a consultations, and we can answer any questions that you may have about the value of revocable living trusts.
Join us for a FREE seminar today! If you have questions regarding living trusts or any other estate planning matters, please contact the experienced attorneys at The Potter Law Firm for a consultation. You can contact us either online or by calling us at (704) 944-3245 (Charlotte or Huntersville, NC) or for individuals in Kentucky at (606) 324-5516 (Ashland, KY) or at (859) 372-6655 (Florence, KY).