Revocable living trusts have many benefits. In fact, most estate planning attorneys consider themselves to be trust based attorneys and love living trusts. However, there are myths that are passed around the kitchen table that just aren’t true.
We’re here to set the record straight:
- Revocable living trusts do NOT protect assets from the nursing home.
While you can provide asset protection for assets you pass to your beneficiaries via your living trust, your assets are not protected. You need good insurances and other means (such as Medicaid) to protect your assets.
- Settling up a revocable living trust does NOT mean all the work is done.
If you become disabled and when you die, your trusted helpers, called “trustees,” must take action and follow the instructions in your revocable living trust. The trust is NOT a magic book.
- Your revocable living trust is NOT a once and done.
Your trust and your overall estate plan must be updated on a regular basis, every three to five years or upon the occurrence of a significant life event such as marriage, divorce, the arrival of a new child, or a move to a new state.
- Your revocable living trust does NOT avoid probate unless fully funded.
Just executing a trust does not guarantee probate avoidance. Your trust must be fully funded to avoid probate. This means that all of your assets must be funded into your trust. In other words, all of your assets must be titled in the name of your trust to avoid probate.
- Revocable living trusts are only for rich people.
Actually, trusts are appropriate for most people. So long as you aren’t trying to qualify for Medicaid to pay for a nursing home or aren’t otherwise destitute, it is likely that you would benefit from including a revocable living trust in your estate plan.
If you have questions about living trusts, be sure to consult with a qualified estate planning attorney.