Creating a revocable living trust in Indiana can be a good way to arrange for your assets to be transferred to your heirs after you pass away. In this post we will provide the answers to some frequently asked questions about these trusts.
What is the primary benefit of a revocable living trust in Indiana?
When you state your wishes regarding the distribution of your financial assets in a last will alone the transfer of assets is going to be stalled by the probate process.
The will must be submitted to the probate court, and the court will determine its validity. If there were any disgruntled parties out there who wanted to contest the terms of the will they could come forward during probate.
If the will is deemed valid the executor or personal representative will go about conducting the business of the estate. This can include property appraisal and liquidation, and payment of final taxes and other debts.
Probate can drag on for months or even years, and considerable expenses accumulate during this process.
When you create a revocable living trust the transfer of assets to the beneficiaries takes place outside of this costly and time-consuming process of probate. This is the primary benefit of these trusts.
Do I lose control of my property?
No, when you create a revocable living trust you may act as the trustee and the beneficiary while you are still alive and well. Because the trust is in fact revocable you can dissolve it if you want to, and you can change the terms.
What happens if I become incapacitated?
One of the benefits of these trusts is the fact that you can name a successor or disability trustee. This individual or entity would assume the role of trustee in the event of your incapacitation.
Are assets that are placed into the trust protected?
No, because you have control of the assets that you conveyed into the trust they are not protected from creditors or legal judgments.
If I apply for Medicaid to pay for long-term care will the assets in the trust be counted?
The answer is yes. Once again, because you can do anything you want with the assets at any time they would be counted by Medicaid evaluators.
Are assets that I conveyed into the trust removed from my taxable estate?
No, the creation of a revocable living trust will not do anything to provide you with estate tax efficiency because you are retaining incidents of ownership.
However, there are other types of trusts that can be utilized if you have tax concerns. The federal estate tax exclusion is $5.25 million this year, so you should certainly discuss tax efficiency strategies with an estate planning lawyer if your assets exceed this amount.
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.