Justin, I recently created a trust. Can I relax? Am I protected now? – Mark
Mark, I’m glad to hear that you created a trust, but I can’t answer your question without asking you a question of my own. You ask a very common question, but my question is—protected from what? Different kinds of trusts can be used in a variety of ways to protect you from a number of different things. I would need to know your goal in creating the trust—what you were seeking protection from—to answer your question.
Protection from probate court is one of the most common reasons a person might create a trust. Almost any type of trust will protect you from probate, from the simplest to the most complex. To know whether your trust will protect you from probate court, I don’t really need any more information about the type of trust you created; instead, I would need to know whether you fully funded your trust after you created it. A trust will not keep you out of probate court unless each and every asset you own is either titled in the name of the trust or set to pass to your trust at your death.
Another common reason a person might create a trust is protection against the high costs of long-term care. You can use a trust to ensure you don’t lose everything if you have to go to a nursing home. But to know whether your trust accomplishes this goal, I’d have to know more about what type of trust you created. A revocable trust does nothing to protect you from long-term care costs, but some irrevocable trusts can.
