This article was written by:
Bridgette E. Becker, Esq.
Revocable Trusts can be extremely effective estate planning tools. Trusts can offer protection to those who you wish to leave assets to after you pass away. When a Will is probated, those listed in the Will receive any bequest outright which may not be the best option for many legatees.
Using a revocable trust enables you, the grantor, to dictate exactly how and when a beneficiary will receive your assets. Trusts can be set up for your loved ones to receive assets outright, for assets to be held in further trust until the beneficiary attains a certain age or held in further trust indefinitely until the assets are depleted.
Trusts are useful if the beneficiary needs creditor protection or if the beneficiary is a spendthrift. Trusts can be set up to ensure that the beneficiary only receives assets for certain expenses or only receives a certain amount at each distribution. Trusts are also harder for creditors to reach as the assets will not be held in the beneficiary’s name. Trusts can also help protect a beneficiary from bad marriages since the funds are held in trust and would not be subject to divorce proceedings as assets in the beneficiary’s accounts. Finally, if your loved one has special needs or receives state or federal benefits, a trust is essential to prevent the beneficiary from being deemed ineligible by the state or federal government. If someone is receiving benefits and then they receive an inheritance outright, they could be pushed over the income threshold and cease receiving their benefits which is not advisable for many people will special needs.
If you have any concerns about creditor protection, protecting your loved ones from spouses in divorce or you intend to leave assets to those with special needs or disabilities, please contact an estate planning attorney to ensure your wishes will be properly carried out through your estate planning documents.