Trusts are excellent legal tools that can be used to accomplish most estate planning and asset protection planning goals. The most common type of trust is a revocable living trust which will hold your assets and help avoid the Santa Barbara County probate process when you pass away.
However, Santa Barbara estate planning attorneys warn that revocable living trusts do not provide much help when it comes to asset protection planning.
Keep reading this article to learn more about revocable living trusts and asset protection. If you have more questions or would like help creating a trust or estate plan, consult with an estate planning lawyer from our law firm today.
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While you’re working with a Santa Barbara estate planning attorney, you’ll learn whether or not a revocable living trust is an appropriate tool to use in your situation. If you own enough assets that your estate will have to go through a full probate proceeding when you pass away, then you will most likely benefit from creating a revocable living trust.
Assets placed in the trust—such as a home, other real property, and financial accounts—can pass to your beneficiaries without the approval of the probate judge. This will save your loved ones time and money and will provide a level of privacy for your personal affairs.
In addition, a successor trustee of your choice can also temporarily manage any finances you place in your revocable living trust if you ever become incapacitated or are otherwise unable to handle your own financial affairs.
Unfortunately, the benefits of a revocable living trust do not extend to asset protection planning. This means that if you owe money to creditors, the creditors will be able to take assets from your trust in order to pay your debts.
When you create a revocable living trust, you are essentially transferring the ownership of the trust funds to a trustee. Even though you are not responsible for the assets in the trust, you still technically own the funds. This allows creditors to go after your trust assets, which is why a revocable living trust isn’t always helpful for asset protection.
Additionally, there are no restrictions on how you can spend the assets in the trust, and you can revoke the trust at any time, meaning the assets will revert to your direct ownership. Also, all assets in the trust are reported to the IRS for tax purposes under your Social Security number, meaning there is even less separation between you as an individual and the revocable living trust.
For these reasons, a revocable living trust doesn’t always help you with asset protection planning. The best way to protect your assets is to work with a reliable estate planning attorney. They can look at your assets and your specific financial situation to create a solid estate plan that will serve your best interests. Trusts may be a part of your estate plan, but there are many other estate planning documents that can protect personal assets more effectively.
If you are interested in protecting assets, consult with a Santa Barbara estate planning attorney. They will provide you with other estate planning resources and documents that can help you protect your assets better than a revocable living trust can. Your estate planning lawyer will provide you with legal advice and act as your guide.
Perhaps the greatest benefit of working with an estate planning attorney is that they can look at your specific circumstances and tell you how to best protect your estate based on your situation. You don’t have to go through the estate planning process on your own. Instead, rely on our team. We will devise strategies that will secure your financial future.
If you are interested in learning more about how certain trusts can be used for asset protection purposes, or if you’d like to know more about estate planning with a revocable living trust, please contact us to schedule a free consultation.
What is the difference between a revocable and irrevocable trust?
A revocable trust can be changed or altered. This is helpful because you may want to revise the conditions of the trust as your situation changes. Meanwhile, an irrevocable trust cannot be changed once it’s finalized. Irrevocable trusts are useful because they have tax benefits, can help avoid probate, and provide asset protection.
What is probate?
Probate is the process of carrying out your will and handling your estate once you pass away. An executor, or personal representative, fulfills this process, and some of their duties include appraising your property, paying off your debts, and distributing your assets to beneficiaries. Probate can be overwhelming and time-consuming. Thankfully, a probate lawyer can help make it a lot more simple.
Do I really need an estate planning attorney?
While you can create an estate plan on your own, there are many benefits to working with an estate planning attorney. The primary benefit is that your lawyer will ensure that all your documents are legal and valid. They have extensive knowledge of California law regarding estate planning and elder law that can help you create a personalized strategy that suits you and your family.