Estate planning is a crucial step to make sure that you can achieve your goals. With an estate plan, you can dictate who receives your assets when you die, transfer complicated assets such as family cabins with a minimum of fuss, and even make provision for your grandchildren’s college education. There are a wide variety of tools available to help you achieve your estate planning goals, and each is different and uniquely tailored to accomplish particular objectives. Trusts can be very useful for a variety of reasons, but it will be necessary for you and your attorney to identify whether a revocable or irrevocable trust is appropriate in your case.
A revocable trust is a trust that can be changed or completely terminated at any time during the lifetime of the grantor. As with any other type of trust, the grantor selects particular property to transfer to the trust. A trustee is named to administer the trust according to the grantor’s instructions, and a beneficiary is named to receive the benefit of the trust’s administration and distribution. With a revocable trust, a grantor can sometimes be both the trustee and the beneficiary. One thing to keep in mind about a revocable trust is that the grantor retains control over the assets in the trust, as he or she maintains the ability to change or void the trust at any time for any reason. Accordingly, a revocable trust does not provide a high level of protection from creditors. For example, if you transfer your assets to a revocable trust, if you are later sued, it may be possible for a successful plaintiff to access the assets in the trust corpus to pay off the judgment, as the assets still are under the control of the grantor.
With an irrevocable trust, once the grantor executes the documents creating the trust, the trust cannot be modified or voided just because the grantor changes his or her mind. Once the assets are successfully transferred to the trust, the assets are no longer under the grantor’s ownership or control in any way. One of the most popular reasons to create an irrevocable trust is for Medicaid planning. When established early enough before applying for Medicaid, any assets transferred to the irrevocable trust will no longer count as assets belonging to the grantor for purposes of determining whether the grantor’s assets are above the cap for eligibility.
We have helped many people with deciding on the right trust documents for their estate plan. Call us today at (320) 299-4249 to talk about your estate