Estate Planning | Making a Difference One Family at a Time

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assets in a trustIf you’ve been thinking about creating a trust, you might wonder if it means giving up control of your assets. This concern comes up often, especially among people who are new to estate planning.

The truth is that you don’t automatically lose access to assets just because they’re placed in a trust. It all depends on the type of trust you use and how it’s structured.

In Connecticut, trusts serve a wide range of purposes, from avoiding probate to protecting assets from long-term care costs. Understanding the distinction between revocable and irrevocable trusts is the key to knowing how much control you’ll retain.

You Keep Control With a Revocable Living Trust

If your goal is to simplify the administration of your estate and avoid probate, a revocable living trust may be the right tool. As the name suggests, this trust is revocable, meaning you can change it, amend it, or revoke it entirely at any time while you’re alive and competent.

When you set up a revocable trust, you typically name yourself as the trustee. This means:

  • You retain full access to all trust assets
  • You can add or remove assets at any time
  • You control how income and principal are used
  • You decide who receives the assets after your death

In short, you’re not giving up access, you’re simply changing how your assets are titled. Instead of being in your individual name, they’re held in the name of your trust, with you still at the helm.

This setup does not protect assets from creditors or estate taxes, but it gives you seamless control during your life and a smooth transition after death.

Irrevocable Trusts Work Differently

An irrevocable trust, by contrast, does involve giving up some level of access and control. Once you transfer assets into an irrevocable trust, you generally cannot take them back or change the terms of the trust.

This is intentional: it’s what gives the trust legal and financial advantages in certain planning scenarios.

For example, Medicare doesn’t pay for nursing home care. Medicaid will cover these costs if you can qualify, but there is a low $1,600 asset limit. So, you could potentially transfer assets to a trust to get them out of your name with Medicaid eligibility in mind.

However, Connecticut law treats revocable trust assets as countable for benefit purposes. On the other hand, if you place assets into an irrevocable trust, those assets won’t count, with a caveat. There is a five-year look-back period, so you have to fund the trust at least five years before you apply for Medicaid.

You typically do not serve as trustee of your own irrevocable trust, and you may not receive distributions from the principal. However, you can:

  • Set the terms for how assets will be used
  • Name beneficiaries
  • Receive income generated by assets in the trust in some cases

So, while you’re not accessing the assets in the same way, the trust still works to support your overall planning goals.

Partial Access May Be Possible

Not all irrevocable trusts operate the same way. Depending on your goals, your trust can be structured to allow limited access or use of certain assets. For example:

  • You may retain the right to live in your home, even if it’s owned by the trust.
  • The trust can permit income distributions, such as interest or dividends, without granting access to the underlying principal.
  • Your trustee may have discretionary authority to make distributions on your behalf, based on the trust’s terms.

Take the Next Steps

Our Glastonbury and Westport, CT estate planning offices welcome new clients, and you can send us a message or call us at 860-548-1000 to set up a consultation.

We also host monthly seminars in these areas, and you can visit our Seminar Page to get all the details.

Jeffrey A. Nirenstein, Estate Planning Attorney
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