A Revocable Living Trust serves two main purposes. The most well-known purpose is to avoid probate. The other, less-known purpose is to provide continuity of management during any period of incapacity. And, because such a Trust is revocable and you serve as your own trustee, you can use your funds for anything you like, invest them however you want, file the same tax returns as always, and amend or revoke the Trust as long as you are competent. It’s very flexible and very beneficial.
Avoid CT Probate
The probate process typically takes close to a year, costs up to several percent of your estate, and requires time and effort to prepare each of the necessary court filings. If you place all your assets in a Revocable Living Trust, the trust distributes those assets upon your death without the costs and timetable of probate. The probate court still collects its statutory fee, because that fee is triggered upon filing a Connecticut estate tax return whether an estate is taxable or not. But, the trust reduces the other costs of administration, because there is less work to do. And of course, your loved ones get their distributions sooner.
Avoid Conservatorship Upon Incapacity
If you become incapacitated, a family member can act on your behalf under a Durable Power of Attorney (DPOA), and it’s critical that you have one. However, the DPOA is very broad and gives your family member the authority to do just about anything for you, but without any guidance or standards. A Revocable Living Trust, on the other hand, includes detailed provisions regarding the proper uses of your assets during your lifetime. In other words, it gives your family member the responsibility and guidance to use your funds as the trust agreement directs. If the trust is properly funded, your successor trustee seamlessly takes over when you can no longer serve as your own trustee, oftentimes eliminating the need for a conservator of your estate.
Medicaid (Title 19, Title XIX) Asset Protection
A Revocable Living Trust, being revocable, does not protect assets from creditors including Medicaid. That’s because you can revoke it and access the trust assets at any time, and the State knows that. The Revocable Living Trust typically is used for the dual purposes discussed above. If you wish to protect assets from Medicaid and/or VA Aid & Attendance, an Irrevocable Asset Protection Trust would be more appropriate. It can be set up so that a family member serves as trustee and can access funds if you want them, but refuse to access funds if the State wants them!
Wills, Trusts and Estate Planning Attorneys in Danbury, CT
Whether you want a Last Will and Testament, a Revocable Living Trust, or an Irrevocable Asset Protection Trust, the laws are complicated and change often with no notice to you. Internet documents may be “valid in all 50 states”, but that just means that they’re not invalid. Documents can properly protect you only if they are based on detailed knowledge of Connecticut-specific law on wills, trusts, probate and Medicaid. In fact, the overlap between Estate Planning and Elder Law is increasing all the time. If you want documents that accomplish your goals and protect you and your loved ones, consult with a Connecticut attorney who is widely recognized as both an Estate Planning attorney and an Elder Law attorney. Do it right, and do it once!