One of the most commonly held misconceptions about estate planning is the idea that you can no longer access or control assets that you convey into a trust. There is some truth in this, because there are irrevocable trusts, and you cannot act as the trustee if you establish this type of trust.

However, the revocable living trust is in a different category. You can rescind the trust after the fact, and you can act as the trustee and the beneficiary while you are alive and well.

Let’s look at some of the reasons why you may want to use a trust instead of a will.

Asset Consolidation

When you make a living trust the owner of the property that will comprise your state, the assets are consolidated and easily identified. This simplifies the estate administration process that will get underway after your passing.

Probate Avoidance

As we have stated, you would act as the trustee and the beneficiary throughout your life if you establish a living trust. In the trust declaration, you would name a trustee to succeed you. This can be someone that you know personally, but some people will use a professional fiduciary.

Trust companies and the trust departments of banks provide trustee services, and this can be the right choice if the trust is sufficiently funded. Of course, your heirs would be the beneficiaries of the trust.

After you are gone, the trustee would distribute assets to the beneficiaries, and the probate court would not be involved. If you use a will, it would be admitted to probate, and a lengthy and expensive legal process would ensue.

Spendthrift Protections

Assets are distributed in lump sums when a will is used as the sole asset transfer vehicle. This may be a source of concern if you are leaving an inheritance to someone that is a poor money manager.

They could burn through the resources quickly and have nowhere to turn for help if they run into financial difficulties in the future.

If you have a living trust, you can include a spendthrift clause to provide asset protection. The trust would become irrevocable after your death, and the beneficiary’s creditors would not be able to touch the principal.

You can also control the nature of the distributions when you draw up the trust agreement. For example, you can instruct the trustee to a distribute a certain amount each month for a prescribed period of time.

Benefit Preservation

Many people with disabilities rely on Medicaid as a source of health insurance, and they get a bit of financial support through the Supplemental Security Income program. These are need-based benefits that are only available to people with very limited resources.

If you are going to be leaving an inheritance to someone that is in this position, you can establish a supplemental needs trust to preserve benefit eligibility. The trustee would be able to use assets in the trust to make the beneficiary more comfortable in many different ways. As long as everything is done correctly, the benefits would remain intact.

Medicaid is required to seek reimbursement from the estates of beneficiaries after they pass away. When you create a supplemental needs trust, you would name a successor beneficiary. This individual would assume the role after the death of the first beneficiary, and Medicaid would not be able to go after the remainder.

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