• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

The Potter Law Firm

North Carolina and Kentucky Estate Planning Attorneys

phone iconNC (704) 944-3245
KY (606) 324-5516
Attend A Free Seminar - KY Attend A Free Webinar - NC/SC THIS IS AN ADVERTISEMENT

  • Home
  • About Us
    • About Our Firm
    • Attorney and Staff Profiles
  • Practice Areas
    • Asset Protection & Business Planning
    • Elder Law & Medicaid Services
    • Estate and Gift Tax Figures
    • Family-Owned Businesses & Farms
    • Incapacity Planning
    • IRA & Retirement Planning
    • Legacy Planning
    • Pet Planning
    • Probate
    • SECURE Act
    • Special Needs Planning
    • Trust Administration
  • Elder Law
    • Coping With Alzheimer’s
    • Emergency Medicaid & Nursing Home Planning
    • Guardianship & Conservatorship
    • Hospice Care
    • Medicaid Planning
    • Nursing Home Planning
    • Veterans Benefits
  • Communities We Serve
    • Kentucky
      • Boyd County
        • Ashland
        • Florence
      • Kenton County
        • Covington
        • Fort Mitchell
        • Independence
    • North Carolina
      • Mecklenburg County
        • Charlotte
        • Davidson
        • Huntersville
  • Resources
    • Definitions
    • DocuBank
    • Elder Law
      • Elder Law Links
      • Elder Law Reports
      • Local Elder Law Resources
        • Ashland Elder Resources
        • Covington Senior Resources
        • Huntersville Elder Law Resources
        • Independence Senior Resources
    • Elder Law Reports
    • Emergency Legal Documents
    • Free Estate Planning Seminars
    • Free Estate Planning Worksheet
    • Frequently Asked Questions
      • Estate Planning
      • Frequently Asked Questions for Families Without an Estate Plan
      • IRA & Retirement Planning
      • Legacy Wealth Planning
      • LGBTQ Estate Planning
      • Medicaid
      • Pet Planning
      • Trust Administration & Probate
    • Is Your Estate Plan Outdated?
    • Kentucky Probate Resources
      • Ashland, Kentucky Probate Resources
    • Newsletters
    • North Carolina Probate Resources
      • Huntersville, NC Probate Resources
    • Reports
      • Advanced Estate Planning
      • Basic Estate Planning
      • Elder Law Reports
      • Estate Planning for Niches
      • Trust Administration
  • Contact Us
  • BLOG
Home » Estate Planning » Is a Living Trust Right for You?

Is a Living Trust Right for You?

January 27, 2016 by John Potter

senior citizen considering living trustInformed planning is a must if you want to take all the right steps to provide for your family after you are gone. You have to look into the subject of estate planning rather deeply if you want to make the right choices.

This may seem self-evident because you do research before you make any big financial  decisions during your life. In spite of this, a remarkable percentage of people have spent no time at all planning ahead for this inevitable event that has enormous financial implications.

A study that was conducted recently found that 51 percent of people who are between 55 and 64 years of age do not have estate plans in place. When you look at the 10 year age group that is comprised of people that are between 45 and 54, the unpreparedness figure is 62 percent.

Since so many people do not make any effort at all, when they do finally decide to put some type of plan in place, they quickly decide on a last will, and many will use online tools to create do-it-yourself last wills. Oftentimes, family members wind up paying a heavy price.

There are other options, and a last will is not always going to be the best choice. With this in mind, let’s look at a compelling reason why a living trust could be much more effective.

Spendthrift Safeguards and Asset Protection

If you were to create a revocable living trust, you would have the power to amend or revoke it as the name suggests. While you are living, you could revoke the trust, and you could take back direct personal possession of the assets. You could also act as the trustee.

Assets in the trust would not be protected if there was a legal judgment against you because you would have the ability to revoke the trust. However, things are different after you pass away.

When you establish a living trust, you name a successor trustee to take over for you after you are gone, and you name your beneficiaries. Once you pass away, the trust would no longer be revocable. The beneficiaries would not have the ability to dissolve the trust.

Because of this, and assets in the trust would be protected from legal judgments if you include a spendthrift provision. Plus, there are various ways that you can structure the trust with regard to the discretion that you give to the trustee to distribute assets. It is possible that some distributions to the beneficiaries could also be out of the reach of creditors.

When it comes to spendthrift protections, you can instruct the trustee to distribute limited assets on an incremental basis to prolong the viability of the trust. Once again, the exact nature of the distributions can be calculated with asset protection in mind if this is a concern for you.

None of this would be possible if you were to use a last will as your vehicle of asset transfer. With a will, you would be facilitating lump sum asset distributions to the heirs, and that would be the end of it. There would be no spendthrift safeguards, and there would be no asset protection.

A Living Trust Is Not a Cure-All

There are certain benefits that can be realized if you were to use a living trust instead of a last will, but some objectives cannot be satisfied by a living trust. This is because you can revoke the trust while you are living.

You are retaining incidents of ownership when you establish a living trust. This is why the assets would not be protected from creditors while you are living, and they would also be part of your estate for estate tax purposes. The federal estate tax carries a 40 percent maximum rate so it is a very big concern for high net worth families (though married couples often use a revocable trust to preserve their combined estate tax exclusions).

Nursing home asset protection is another consideration. Many people apply for Medicaid to pay for long-term care late in their lives because Medicare does not pay for it. You cannot qualify for Medicaid if you have significant assets in your own name. Assets in a living trust would be counted because of the ownership factor.

There are irrevocable trusts that can be used for estate tax savings, nursing home asset protection, and other purposes.

Schedule a Consultation

If you reached our site, you are looking for answers. Our firm would be glad to discuss your objectives with you in person. To set up a consultation, send us a message through our contact page or call us at (704) 944-3245.

 

  • Author
  • Recent Posts
John Potter
Latest posts by John Potter (see all)
  • What You Need to Know about the Medicaid Look-Back Rule - January 3, 2023
  • How to Pass Down Your Legacy in Your Estate Plan - October 3, 2022
  • Practical Steps to Take after Receiving a Terminal Diagnosis - September 30, 2022

Filed Under: Estate Planning

Other Articles You May Find Useful

How to Gift to Your Grandchildren in Your Estate Plan
pour-over will
What Happens If I Leave Property Out of My Living Trust?
estate tax
2022 Estate Tax Exclusion Has Been Set
QTIP trust
How Can You Protect Your Children’s Inheritances If You Get Remarried?
probate
Are There Any Probate Shortcuts in North Carolina?
life estate
What Is the Purpose of a Life Estate?

Free Estate Planning Worksheet

There's a lot that goes into setting up a comprehensive estate plan, but with our FREE worksheet, you'll be one step closer to getting yourself and your family on the path to a secure and happy future.

Texting Permission

Follow Us

  • Facebook
  • Instagram
  • LinkedIn
  • RSS
  • Twitter
  • YouTube

Subscribe to Our Blog

  • This field is for validation purposes and should be left unchanged.

Testimonials

default image

Overall The Potter Firm was very professional. They took what could of been a very complicated process and were able to break it down so it was a lot easier to understand. We are confident we now have made the right decisions in our estate planning. Good firm to work with.

DKS & KMS Client Review August 28, 2020

default image

John Potter has been a real pleasure to work with. He is very knowledgeable and explains things in a very simplistic manner so the average person can understand how/why the laws are written. He is very attentive and asks questions in such a way that not only helps him understand your goals, but also helps you think about what type of goals and expectations you should be considering. Exemplary client service.

David J. Client Review August 28, 2020

default image

My husband and I selected Ms. Potter to assist with our small business. She responsive and attentive every time I have a question or need assistance, and is extremely knowledgeable and able to answer any legal question I have had. I know I can count on Ms. Potter for all of my business legal needs and I would highly recommend her to anyone needing legal assistance with such.

Jillian Client Review August 28, 2020

<< Prev
Next >>

Where We Are

Ashland

ASHLAND
1620 Carter Avenue
Ashland, KY 41101-7631
Phone: (606) 324-5516
Fax: (606) 324-4766

Charlotte

CHARLOTTE
15720 Brixham Hill Avenue
Suite 300,
Charlotte, NC 28277
Phone: (704) 944-3245

Huntersville

HUNTERSVILLE
11330 Vanstory Drive
Huntersville, NC 28078
Phone: (704) 944-3245

Northern Kentucky

NORTHERN KENTUCKY
7310 Turfway Road
Suite 550,
Florence, KY 41042
Phone: (859) 372-6655

Office Hours

Monday8:30 AM - 4:30 PM
Tuesday8:30 AM - 4:30 PM
Wednesday8:30 AM - 4:30 PM
Thursday8:30 AM - 4:30 PM
Friday8:30 AM - 3:00 PM

Map/Location

potter_sidbr_map
potter law logo
  • Facebook
  • Instagram
  • LinkedIn
  • RSS
  • Twitter
  • YouTube

The information on this website is for general information purposes only. Nothing on this or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. The information on this website is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.

Privacy Policy | Terms of Service | Disclaimer | Site Map | Powered by American Academy of Estate Planning Attorneys

© 2023 American Academy of Estate Planning Attorneys, Inc. THIS IS AN ADVERTISEMENT