The Major Downside Of A Revocable Trust
A revocable trust offers many benefits. But, it also offers one major downside that could affect your beneficiaries and the assets you wish to give them.
Going over the major downside of a revocable trust, and speaking with an estate planning lawyer, will allow you to protect your assets.
What Is A Revocable Trust?
A revocable trust is a trust that can be revoked or changed at any time. Just as an example, if you set up a revocable trust but, then, choose to revoke it and the assets within it, you can do so at any time.
The fact outlined above does not apply to irrevocable trusts. Or, for that matter, to other, related, trusts. They often come with rules that prevent people from revoking and changing them at will.
Why Is A Revocable Trust Useful?
A revocable trust can be very useful for the following reasons:
- By developing a revocable trust, your beneficiaries can avoid probate.
- Avoiding probate will save your beneficiaries a great deal of time and money.
- You can keep your assets, and your beneficiaries information, private with a revocable trust.
- A revocable trust can help you ensure that your estate planning wishes are granted.
- If you are incapacitated, your trustee can ensure the distribution of your assets.
Even though a revocable trust can be, and often is, very useful, there is one major downside to setting one up. And, it is this downside that the rest of our quick guide is concerned with.
What Is The Major Downside Of A Revocable Trust?
The major downside of a revocable trust is that all of the assets you put into a revocable trust count towards the total value of your personal assets.
On its own, this may sound fine. But, if you would like to obtain Medicaid, for example, you may not be able to do so since, again, the assets within the trust still count towards your personal asset value.
If you place your assets in another trust – one that is more strict, when it comes to moving assets around – then that may not be the case. And, you will have an easier time satisfying the requirements of Medicaid, and other programs.
Outside of that major downside, there is another that must be considered: your assets will not be protected from creditors, if they are placed in a revocable trust.
A good example of the above is as follows: you place your assets in a revocable trust and, because of this, the people you owe money to can collect from your estate in order to pay off what you owe them.
The above will not happen if you place your assets in an irrevocable trust. This doesn’t necessarily mean you can avoid paying off your debts, but it can protect your beneficiaries in a way that revocable trusts are unable to.
Speak With A Florida Estate Planning Lawyer Today
If you would like to set up a trust, the best thing you can do is work with a lawyer. Speak with a Florida estate planning lawyer at Millhorn Elder Law Planning Group today and we will help you set up a trust that satisfies your goals.
Sources:
law.cornell.edu/wex/revocable_trust
law.cornell.edu/wex/irrevocable_trust
