Understanding both the advantages and disadvantages of revocable trusts can help in your decision-making process. Here are some of the benefits and potential pitfalls of a revocable trust.
Advantages of a Revocable Trust:
- You can act as your own trustee
- You can transfer assets outside of probate
- Your successor trustee can manage assets in case of your incapacity
- The trust is usually simple to create
- You can modify or cancel your trust easily at any time
Disadvantages of a Revocable Trust:
- Your trust assets aren’t protected from creditors
- You may not qualify for needs-based Medicaid coverage for a nursing home because the assets held in trust are still counted as resources when determining benefits eligibility
- Your estate may have to pay estate taxes even on assets held in a revocable trust
Ultimately, you should consider whether your primary goal is to protect your assets or to retain the flexibility to manage them as you see fit.
Both revocable and irrevocable trusts have significant benefits, and each can play a role in a comprehensive estate plan. The best option for anyone considering creating either type of trust is to get help from a qualified legal professional.
The Treglia Law firm can assist with exploring different trust options, drafting an enforceable trust and making a comprehensive plan to protect your loved ones and your wealth after you are gone.