Living trusts are an important part of many people’s overall estate plan. They offer a variety of advantages and can be used in many different ways. Due to their popularity, however, there are also a lot of myths surrounding living trusts, some of which could end up costing you thousands of dollars. Read about these myths and what makes them false so you don’t make the same mistakes that others have.
Living Trusts Will Help You Avoid Estate Taxes
This is likely the most common myth, and with good reason. Most people associate trusts and other estate planning with tax avoidance. While there are certainly steps that can be taken (some of them even including trusts of different types) to reduce your estate taxes, a living trust isn’t one of them.
Once a Living Trust is Created it Can Be Ignored
As with all estate planning efforts, a living trust needs to be looked at and reviewed from time to time to ensure it is still optimized based on changes to estate planning law. You’ll also want to continue to fund your living trust as your assets grow and change. Even if your estate is essentially static, you will still want to review your living trust at least once a year with an estate planning attorney.
A Living Trust Will “Hide” Assets from Medicaid for Purposes of Long-Term Care
This is a very dangerous myth, which could cost you thousands of dollars. If you need to live in a long-term care facility, you will likely want Medicaid to step in to cover the expenses. If you have too many assets, Medicaid will require you to use those assets to pay for your care until they are gone. In almost all cases, moving ownership of assets into a living trust won’t be sufficient on its own to pacify Medicaid. There are strategies that can be put in place to protect your assets from Medicaid, but a living trust alone isn’t one of them.
A Living Trust is All You Need
A living trust is a great estate planning tool, there is no doubt about that. To suggest that it is the only one you need, however, is a mistake. Everybody’s situation is going to be unique, and their estate plan should reflect this. Using a living trust may be a good idea for you, or there may be other estate planning vehicles that might be better. Working with an experienced attorney is the best way to know for sure.
A “Do it Yourself” Living Trust is Just Fine
There are “do it yourself” style options for just about everything today, and they can be quite tempting. The fact is, however, that living trusts are absolutely not a “one-size-fits-all” type of legal document. Having an experienced estate planning attorney is critical for ensuring everything is done correctly. Contact ProActive Legal Care to go over your estate planning needs today.
