The Advantages of Setting Up a Living Trust

April 25, 2024

Introduction

When it comes to managing your estate, a living trust offers a flexible and powerful solution that can significantly simplify how your assets are handled both during your lifetime and after. By transferring your assets into a trust, you not only maintain control but also ensure that your estate bypasses the lengthy and costly probate process. Here’s a closer look at what a living trust is and the numerous benefits it can provide.

What is a Living Trust?

A living trust is an estate planning tool that allows you to transfer your assets into a trust while you are still alive. You designate a trustee who will manage these assets for the benefit of your beneficiaries, who will inherit them after your passing. This arrangement is not only practical but also provides a seamless transition of your estate, avoiding legal hurdles that often accompany traditional wills.

Key Benefits of a Living Trust

Avoiding Probate and Estate Taxes

One of the primary advantages of a living trust is its ability to bypass the probate process. Probate can be both time-consuming and expensive, potentially diminishing the value of the estate due to prolonged legal fees and court costs. Moreover, living trusts may also help minimize estate taxes, ensuring more of your assets go directly to your beneficiaries.

Revocability

Living trusts are typically revocable, which means they can be altered or dissolved as long as you are alive and competent. This flexibility allows you to adapt your estate plan as your circumstances change, such as altering beneficiaries or trustees without significant legal overhead.

Enhanced Privacy

Unlike wills, which become public records through the probate process, living trusts offer a private way of transferring assets. This privacy ensures that the details of your estate are not exposed to the public, protecting your family’s privacy and reducing the likelihood of disputes among potential heirs.

Asset Protection

Living trusts provide a protective shield for your assets, safeguarding them from lawsuits and creditors. This is especially crucial for individuals in high-risk professions or those who want to protect significant assets for their heirs.

Special Provisions for Disability and Care

Living trusts can be particularly beneficial in planning for disability or incapacity. You can specify in the trust how to handle your affairs if you are unable to make decisions, ensuring that you have a trusted person in place to manage your financial and healthcare needs.

Care for Disabled Dependents

For families with disabled children, a living trust can ensure that those children are provided for without jeopardizing their eligibility for government benefits like Medicaid or Social Security.

Flexibility in Complex Family Situations

Living trusts are invaluable in blended families or complex family dynamics, allowing you to specify precisely how your assets should be distributed among your loved ones without causing conflict or misunderstanding.

Living trusts are an essential component of comprehensive estate planning. They not only provide security and privacy but also ensure that your assets are managed according to your wishes with flexibility and efficiency. If you’re considering establishing a living trust, consult with an experienced attorney at our firm to tailor a plan that best suits your needs and those of your beneficiaries.

Interested in setting up a living trust or learning more about how it can benefit your estate planning strategy? Contact us at Jurist Law Group, PLLC for professional guidance and to ensure your assets and loved ones are protected according to your wishes. Schedule your consultation today and take the first step towards a secure financial future.

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Beginner's Guide to Estate Planning

By Kimbro Stephens • July 31, 2024

Estate planning can feel overwhelming for those who have never put together a plan or who haven’t reviewed theirs every three to five years as recommended. The good news is that with the help of a specialized lawyer, this process can go much more smoothly and efficiently than many anticipate. In that vein, we thought we would share a general checklist that we send to our clients who are preparing to create or update an estate plan. Essential Components of an Estate Plan Beneficiary Designations Make sure you name a beneficiary for all non-probate assets, including 401(k)s, IRAs, life insurance policies, pensions, and bank accounts. For those who already have an estate plan, it’s important to ensure that the person currently named is still the person you want to be the beneficiary. Financial Power of Attorney Choose someone you trust who can make financial decisions for you in the event you are unable to do so. Advanced Healthcare Directive Ensure your medical preferences are followed using a living will. In addition, you’ll want to name a trustworthy friend or family member (often a spouse, parent, or child) as your medical power of attorney. This person will make medical decisions for you in the event you are unable to do so. Name a Digital Executor In this day and age, it’s wise to name a digital executor. This person can follow instructions you leave regarding all of your digital assets, such as bank accounts, social media, digital files, photos, and online storage. Proof of Identity Make sure all of these documents, including your marriage license/divorce certificates, Social Security card, and prenuptial agreements, are in one place and easy to locate. Property Deeds and Titles Confirm that all deeds and titles are up to date and in an easy-to-locate place–and if you’ve established a trust, make sure to retitle your property to list the trust as the owner. Funeral Instructions Make a list of your preferences regarding your funeral and place it with your will and other important documents. List your preferences, such as whether or not you wish to be cremated, a passage you want someone to read, or a list of preferred charities for donations. Insurance Information Gather all of your policies and make sure your executor knows where they are and what to do with the information. While this is not an exhaustive checklist, it’s a good jumping-off point to work from in consultation with an estate planning professional. Estate planning is not something people love to talk about, but it is important that it is done–and done right. Common Estate Planning Mistakes to Avoid Failing to Include Power of Attorney A power of attorney names someone you trust who can act in your stead should you become medically incapable of making important financial, legal, and/or medical decisions. Misunderstanding Your Estate Plan It’s critical you take the time to read through and understand the plan, what it entails, and what will happen when it is put in motion. Forgetting to Update It as Circumstances Change Our lives evolve constantly, and it’s important that your estate plan reflects changes. We have dealt with estates where assets and money were left to ex-spouses or deceased family members. Additionally, we have seen feelings hurt by a family member who was left out of the document because they married into – or were adopted into – the family after the plan was created. It is vitally important that you revise your plan at least every five years to make sure your wishes are reflected and followed. Failing to Fund Revocable Trusts Many estate plans include a revocable trust. Assets owned by the trust are protected from being tied up in probate court. Your attorney will draw up the appropriate paperwork, but you will need to transfer the relevant assets to the trust. For example, your house will need to be owned by the trust and not by you individually. Many clients fail to realize this and skip this important step, negating the work they did in creating the trust in the first place. Conclusion Estate planning is a crucial step in ensuring that your assets are managed and distributed according to your wishes. At Jurist Law, we are here to guide you through the process, making it as straightforward and stress-free as possible. To learn more about estate planning and to get your questions answered, attend our upcoming event. Our experienced lawyers will provide valuable insights and help you take the first step towards securing your legacy.

Is It Too Late to Save Resources If Our Loved One Is Already in the Nursing Home?

May 20, 2024

It’s never too late to save money. If, however, you wanted to save 100% of your money, you should have started planning five years before you needed Medicaid (through a Medicaid asset protection trust). You can give assets away, but any assets you give are counted for five years against you for Medicaid purposes. Most of my clients who come to me who haven’t done any sort of pre-Medicaid planning, nor have they set aside assets. The rule of thumb is that if you’re married and the first spouse needs to go into a nursing home, I can save 100% of your money—at least nine out of ten times. If your resources are vast, let’s say over half a million, then you may not be able to save all of it, but we can help you save most of it. Most of my clients are not worth more than half a million dollars, which is why they’re looking for Medicaid. If you’re not married and you’re single, I can still save half of your estate at that time, assuming it’s not over $500,000. Even without proper planning, you can always make gifts after you’re in a nursing home to protect assets and give assets to children while you’re still qualifying for Medicaid. So, it’s never too late; the worst you can save is half, but you might be able to save 100% of your resources if you plan ahead. What Are Some of the Biggest Mistakes That You’ve Seen People Make When It Comes to Elder Care Planning or Medicaid Planning? What Could They Have Done Differently With Your Assistance? First of all, one of the biggest mistakes that I see is people having a revocable living trust, which preserves assets from having to go to probate but does no Medicaid planning for them. Instead, I would advise them to look at protecting their home, and there are a number of ways to do that. We can protect the home through what we call a life estate deed or maybe with a Medicaid residential trust, which protects the home long-term from having to be liquidated to pay for a nursing home bill after your death. It will also take the home off the table so that if you sell it while you’re in a nursing home, it doesn’t disqualify you and protects the proceeds. Another mistake I see is parents deeding their house to their children outright. That’s a terrible mistake for a number of reasons. First of all, it counts against them for five years, which becomes an issue if you need Medicaid within that five-year period. There are also a number of problems that come with deeding your house to someone, the most obvious being that the house is not yours anymore. If your child gets sued by a creditor or they get divorced or whatever, your home is now subject to their creditors, and you might have to move out. Let’s say you did deed your home to your children five years before you need Medicaid; when you pass away, if your children decide to sell the house, they’ll have to pay capital gains on that sale for whatever you paid. So, that’s not a good option. Instead, I recommend putting your house in a trust that will preserve your tax exclusions upon your death and make it to where your children don’t have to pay taxes. It would take it off the table for Medicaid planning in advance, and it would also preserve the proceeds if you sell it while you’re in a nursing home. I see these two mistakes—relying on a revocable living trust for Medicaid planning and deeding your house to your children—on a regular basis. There are better ways to plan for Medicaid.