Trusts are a popular legal tool that can significantly help you and your family. A Living Trust keeps your family out of probate court, your estate private, and can help manage money for heirs that can’t handle a lump sum inheritance. An irrevocable trust can do even more, including helping you qualify for long-term care benefits, qualify for other benefits, and shield assets from divorce, creditors, bankruptcy, and more. Setting up a trust can help you and your family thrive. However, property in a trust no longer legally belongs to you. So who owns the property in a trust?
Revocable “Living” Trusts
When you set up a living trust, you place property or assets into trust. You no longer legally own the property, but you can name yourself the trustee. Your property is no longer in your name but is now in the name of your trust.
As the trustee of your living trust, you manage the property in the trust according to the terms you wrote up with your attorney. You’re still in charge of these assets, just as you’ve always been.
One benefit of a revocable living trust is that you can change the trust terms or add and remove property as you choose while you are living. After death, or if you become incompetent or incapacitated, the trustee you appoint steps in as the successor trustee to handle your affairs.
By law, the trustee must act based on the trust’s terms. If you end up incapacitated in a hospital, your trustee must act in your best interests. Once you pass away, a successor trustee must act in the best interests of the estate and its heirs.
Living Trusts Save Money
A revocable living trust is a legal framework that allows your family to avoid the pain and hassle of probate court. This type of trust works along with a pour-over will to ensure that your estate owns nothing at your death. Because your estate owns no assets, probate courts have no jurisdiction over your estate settlement.
At your death, the successor trustee you appoint handles all matters related to your estate. In your trust, you can outline your inheritance wishes for your heirs, knowing that your successor trustee will act in the best interests of the estate.
Better for Your Heirs
The trustee you choose as your successor handles all matters related to your estate so that distributions to your heirs can happen as you choose instead of by dictates of a judge in probate court.
A Living Trust can allow your estate to give distributions to your heirs in whatever amounts you choose and whenever you choose. The trustee continues to manage your trust until settled.
A living trust especially benefits any heirs on SSI, SSD, Medicaid, or other government benefits. Giving a lump sum inheritance to a disabled individual can cause them to lose crucial government benefits such as housing, transportation, and healthcare.
Government benefits often require low income and assets to qualify as a recipient. Recipients of these programs can also lose essential benefits by inheriting a lump sum. Instead, with a living trust, the trustee may distribute a smaller amount each month to those beneficiaries who would otherwise lose benefits with a lump sum inheritance.
Protecting Your Assets
NC Division of Medical Assistance (DMA) could file a claim against a probate estate if you received Medicaid payments during your lifetime. However, the state may not recover these funds from your estate with a Living Trust since your estate is not probatable. If you’ve qualified for Medicaid benefits, your estate can lose significant amounts in probate court.
However, a living trust cannot protect your estate from Medicaid Recovery for long-term care. To protect assets from Medicaid long-term care recovery claims, you’ll need to open an irrevocable trust. Your asset strategy attorney can help you set up this type of trust to protect assets from long-term care costs.
In addition, you can lose assets to creditors who show up at the public announcements of your estate. Unethical creditors may make illegal, false claims against your estate that a probate court could pay without knowing they are false.
Protecting Your Loved Ones
Without a living trust, your estate goes into probate court, where family members and the public can see the assets in your estate along with the inheritances you planned. Family strife often starts when loved ones see something that they believe is unfair in your will.
Frivolous lawsuits by greedy family members can cause an estate settlement to drag on for years in probate court, eating up your estate assets with court and attorney fees. You can avoid this scenario by setting up a living trust with a successor trustee to distribute your assets privately.
We Can Help
At Vail Gardner Law, we keep your assets and loved ones safe from court interference through legal strategies such as living trusts. Talk with us and learn how to retain your assets while living and avoid probate court and costs from eating into your estate after you pass away. Contact us today and find out how we can help you and your loved ones plan for the future.