Revocable living trusts are largely utilized to enable probate avoidance. Probate is a legal process, and it takes place under the auspices of the probate court. People often times try to avoid this process because it is time-consuming, it can be expensive, and it strips you of your privacy because it is a public proceeding.
However, there are some misconceptions about revocable living trusts. There are objectives that some people have that these devices will not accomplish, and we would like to look at three of them here.
Asset Protection
Individuals who are in certain lines of work may be especially vulnerable to lawsuits, and we do live in a litigious society. Asset protection is a priority for people who are in this position. Revocable living trusts provide no asset protection because the grantor retains incidents of ownership.
Estate Tax Efficiency
It is possible to utilize certain types of trusts to gain estate tax efficiency. However, when you convey assets into a revocable living trust they are considered to be part of your estate for tax purposes.
Medicaid Eligibility
Many seniors seek Medicaid eligibility because Medicare won’t pay for long-term care, but Medicaid will if you can qualify for the program. There are upper asset limits that you must stay within to be able to qualify for Medicaid coverage. Assets that you have placed into a revocable living trust are counted by Medicaid when evaluators are determining your eligibility.
It is wise to refrain from making any assumptions about legal devices. To be certain that you are executing the appropriate documents given your unique personal financial situation discuss things with a licensed and experienced estate planning attorney.
Mr. Horowitz was awarded his Juris Doctor degree with honors from the University of Connecticut School of Law. While attending law school, Mr. Horowitz received the American Jurisprudence Award in Legal Ethics and the Nathan Burkan Award.
After graduation from law school, Mr. Horowitz continued his legal education at New York University School of Law where he received a Post Doctorate Law Degree in Taxation. He has also recently received a national achievement award.
Mr. Horowitz is admitted to practice before all the state courts in the State of Connecticut and the United States District Court.
Mr. Horowitz was selected for Super Lawyers in 2021.
- What Is a Stepped-Up Basis? - August 16, 2022
- Five Ways You Can Unintentionally Unravel Your Estate Plan - July 28, 2022
- What Is Estate Planning? - July 12, 2022
