Can a Trust help me?

(This article was originally published in the Wakefield Daily Item)

By PATRICK G. CURLEY, ESQ.

Q. Is a Trust right for me?    

 A. Trusts are not magic solutions to every problem, but they can achieve many important planning goals.

For many people, including many non-estate planning lawyers, a “Trust” is an intimidating legal term.  A common misconception is that Trusts are for the rich only.  Often people do not know what goals their Trust may accomplish for them.  I am afraid that part of the blame for the misinformation and misunderstanding falls on the shoulders of lawyers who fail to explain them to clients.

I use a simple analogy to help illustrate Trusts.  I tell clients that a Trust is like a bucket.  Someone has to hold the bucket and that person is called a Trustee.  If you want two people holding the bucket, then just add an “s” and call them Trustees.  You can put things you own (house, bank accounts, etc.) into the bucket.  The Trustee can take those things out of the bucket and distribute them.  In a nutshell, that is how a Trust works.

A Trust is, of course, a complex legal document.  At its heart, the Trust describes a virtual bucket that can hold assets, identifies the person establishing the Trust, identifies the Trustee (and who can replace a Trustee), and gives the Trustee directions on what to do with the assets in the Trust bucket.

Because many people want their Trusts to help them avoid Probate Court if they become incapacitated or upon their death, in most cases, it is ideal to fully “fund” the Trust at the time the Trust is created.  Unfortunately a lot of folks miss the boat on this.  Here is how it often plays out.

A client visits their lawyer and creates a Trust.  At the same time, the client signs a “Pour-over Will” to pour their probate assets into their Trust upon death.  The client leaves the office believing they are “all set.”  Years later the client passes away and the children think there will be no Probate because the parent had a Trust.  But during their lifetime, the parent never transferred their assets out of their name and into the name of their Trust.  As a result, the children must Probate the estate so that the parent’s assets pass through the Pour-over Will and into the Trust.  The time, stress, and expense of Probate was unnecessary.

So how do you get your assets into the Trust bucket while you are alive?  You have to carefully “re-title” your assets into your Trust.

For a bank or investment account, this would mean that you complete paperwork to change the name on the account from your name to the name of your Trustee and Trust.  For real estate, you would have to sign a deed conveying the real estate from you to the Trustee of your Trust.  Almost any kind of asset can be re-tilted into a Trust.

Before readers race to fund their existing Trusts, I caution readers to consult a Qualified Elder Law Attorney to confirm whether their Trust in fact accomplishes the planning goals they wish to achieve.  For example, let’s say you want to keep your house off limits to Medicaid.  If you learn that your Trust will not protect your house, then it makes no sense to deed your home into that Trust.

Readers also must confirm that it is most beneficial to fund the Trust today.  While in most cases, immediate funding is beneficial, with certain types of Trusts there may be potential Tax and MassHealth consequences you must consider before taking action.

A Trust can be a wonderful tool, but not all Trusts are created equally.  Be wary of any plans downloaded from the Internet or pulled out of a book.  Trust and Asset Protection laws are complex and change regularly.  Without experienced guidance from a Qualified Elder Law Attorney who specializes in this area, you might inadvertently make common mistakes like muddying the title to your home, causing unnecessary income taxes to your family, disqualifying a disabled child or grandchild from benefits they might be receiving, or losing your assets to nursing home costs.  A poorly-designed Trust can cost your family much more than no Trust at all.

In my next post, I will explain the dramatic differences between Revocable Trusts and Irrevocable Trusts.  I will preview that column by saying that the word “Irrevocable” in the name of the Trust does not mean that the Trust is in fact Irrevocable.  It is the language in the Trust that controls whether the Trust is truly Irrevocable.  As you can imagine, Medicaid and our Courts are more than happy to reject poorly-drafted Irrevocable Trusts, which render those Trust assets fully available to the nursing home.

Advertisements

0 Responses to “Can a Trust help me?”



  1. Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s




Contact Us!

Do you have an Elder Law or Estate Planning question? E-mail questions to Info@CurleyLawFirm.com or call 781.245.2222 x10 to be considered for future columns).

About Curley Law Firm LLP

Serving clients throughout Massachusetts, Curley Law Firm LLP draws upon more than four decades of combined Estate Planning and Elder Law experience to ensure that you can achieve your planning goals.

Attorneys Patrick Curley and Lucy Budman are two of fewer than two dozen Certified Elder Law Attorneys (CELA) in Massachusetts. Attorney Mark Curley has practiced in the areas of Estate Planning and Elder Law for over three decades.

The value of working with a firm with CELAs on the team is the peace of mind you receive - knowing that you will get the very best advice available to protect yourself, your family and your assets. A CELA is a recognized expert in legal matters dealing with Estate Planning and Elder Law including Trusts, Wills, Asset Protection against Medicaid and nursing home costs, Medicaid (MassHealth) benefits planning and applications, Probate and Trust administration, Guardianship and Conservatorship, and VA benefits planning.

At a time when many lawyers claim to practice "elder law", having a CELA-led team working on your planning means having one of the very few experts in the Commonwealth on YOUR team.

For experienced representation and quality service from attorneys who will help you achieve your planning goals, please schedule a confidential Initial Consultation by calling us at (866) 406-8582 or visit our website at www.CurleyLawfirm.com

Archives

Categories


%d bloggers like this: