When you consult with an estate planning attorney you can be certain that you are not making any decisions based on misguided notions. It is easy to assume things without having a full understanding of the legal devices that are available to you when you’re planning your estate, such as an Indiana revocable living trust.
Indiana Revocable Living Trusts: No Asset Protection
In a general sense people often think that you no longer own assets that you place into a trust. That’s the whole idea, divestiture of personal ownership.
The truth is that the matter is more complicated than this because there are different types of trusts. There are trusts that are irrevocable, and because of this you surrender incidents of ownership. But there are other types of trusts that are revocable, and as such you retain incidents of ownership.
One of these is the revocable living trust. With this type of trust you as the grantor will typically act as both the beneficiary and the trustee while you are alive and well. You control the funds, and you have access to distributions.
Essentially, you can do anything you want to do with the assets that you have conveyed into the trust. There is nothing stopping you from using money that you placed into the trust to pay outstanding debts or to satisfy legal judgments against you.
Because you have incidents of ownership the assets are not protected from creditors or claimants seeking redress.
What Good Are They?
You may ask why anyone would want to create a revocable living trust when you hear that they don’t provide any asset protection. For the most part, the answer to this question can be reduced to two words: probate avoidance.
Many people are not aware of the fact that the heirs to an estate do not immediately receive their inheritances after some type of “reading of the will.” In reality the estate must be administered under the supervision of the probate court before inheritances are distributed to the heirs.
This process can take a number of months or even multiple years in complicated instances. Probate is a public proceeding, so inquisitive types can know everything that they want to know about your estate.
And, some very significant expenses can pile up during the probate process. Anything that is consumed during probate is money that could have otherwise gone into the pockets of your loved ones.
For these reasons people often discuss probate avoidance strategies with estate planning attorneys. One of the most common ways that you can avoid probate is by conveying assets into a revocable living trust for the benefit of your heirs.
Asset protection can be accomplished by employing different strategies, and you can gain an understanding of your options by discussing your situation with a licensed estate planning lawyer.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.