Although you will undoubtedly continue to rely on a Will within your estate plan, as your family and your estate grow you will need to incorporate additional tools into your estate plan in order to achieve a widening circle of goals. Among the most common of those additional tools is a living trust. While there are a seemingly endless number of reasons why you might want to include a living trust in your estate plan, the Indianapolis trust attorneys at Frank & Kraft explain five popular reasons.
- Planning for the possibility of your own incapacity. Although you may not have given it much thought, you could become incapacitated any time as the result of a tragic accident or debilitating illness. If incapacity does strike, someone must take over the control and management of your assets during your period of incapacity. One of the many benefits of a revocable living trust is that it works as an incapacity planning tool by first allowing you to name yourself as the Trustee. Then name the person you wish to take over control of the trust assets in the event of your incapacity as your successor Trustee. You then transfer major assets into the trust and manage them as you always have. If you become incapacitated, however, control shifts seamlessly to your designated successor Trustee without the need for court interference.
- In case you need to qualify for Medicaid. For many seniors faced with the high cost of long-term care, Medicaid is their only hope for help covering those costs. Qualifying for Medicaid, however, can put a retirement nest egg in jeopardy if you failed to plan ahead because of the Medicaid asset limits used to determine eligibility. Creating an irrevocable living trust as part of a larger Medicaid planning component within your estate plan can protect those assets while ensuring your eligibility for Medicaid if you need it in the future.
- Avoiding probate. Probate is the legal process that is typically required following the death of an individual. Probate is used to identify and value the assets of the decedent as well as provide creditors of the estate with an opportunity to file claims against the estate. If you use a Last Will and Testament to distribute your estate, the Will must be probated. That means the beneficiaries of the Will must wait until the conclusion of the probate process before receiving their intended gifts. Even a relatively modest and uncomplicated estate can take months to get through the probate process which is why using a revocable living trust is often a better option. The benefit to using a trust to distribute estate assets is that trust assets bypass the probate process altogether, allowing them to be distributed as soon after your death as you dictate using the trust terms.
- Protecting your assets. Whether you are concerned about creditors, divorce, Medicaid eligibility, or other threats to your assets, an irrevocable living trust can help. Assets transferred into an irrevocable living trust become trust assets. As such, you no longer have an ownership interest in those assets, meaning they cannot be reached by creditors or other threats. There are a number of specialized irrevocable living trusts, such as a Domestic Asset Protection Trust (DAPT), that can help you protect your assets. Working closely with your estate planning attorney can help you decide which type of irrevocable living trust you need.
- Protecting the inheritance of a minor child. Legally, your minor child cannot inherit directly from your estate. Shielding your child’s inheritance in a living trust ensures that those assets are protected until your child reaches the age of majority and can inherit directly. A living trust also allows you to stagger the distributions your child eventually receives so that he/she has time to learn how to handle the inheritance. No matter how mature your child is, handing an 18 year old a large lump sum inheritance is rarely a good idea.
Contact Indianapolis Trust Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns regarding a living trust, contact the experienced Indianapolis trust attorneys at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.