ASK THE PROS

I Created a Trust—Now Am I Protected?

Justin, I recently worked with an attorney to create an estate plan centered on a trust. Can I relax? Am I protected now? – Tim

Tim, I’m glad to hear that you’ve done some planning. I can’t answer your question, though, without asking you a question of my own. Protected from what? Different kinds of trusts can be used in different ways to protect you from several different things. I would have 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 to create a trust, and most types of trusts will do that. I don’t have to know a ton of details about your trust to know whether it will keep your estate out of probate. 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 you do your homework after you signed it.

Protection against the high costs of long-term care is another reason people create trusts. You can use a trust to ensure you don’t lose everything if you have to go to a nursing home or need some other type of expensive care late in life. But to know whether your particular trust accomplishes that goal, I’d have to know more about it. A revocable trust, which is most common, does nothing to protect you from long-term care costs. Some irrevocable trusts can.

You might also have sought certain tax advantages in setting up your trust, or you might have had reasons to want to protect your heirs from themselves or others. Your question is more complicated than you may have thought.

My book, You Need A Plan, gets into these issues in a lot more detail. Order a copy at YourPlanMatters.com. Better yet, give us a call to set up a no-charge strategy session.

Are you in a similar situation?

We can help you navigate your unique circumstance.

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