Uncover the truths about revocable trusts
Revocable trusts are just one type of trust out of many. I get calls all week from people asking me to do a trust for them. I say that’s super, but which one! What I’m really asking is what is your goal for the trust?
More often than not, people are trying to pass their property to loved ones while avoiding probate. The revocable trust helps people avoid probate, it does not however provide Medicaid asset protection. The main reason someone would use a revocable trust is if they’re interested in keeping the transaction private when they pass their assets to their kids. A will is public record and anyone can go into the surrogate’s court in any county and find out all the details of your will. A trust avoids this publicity. The more likely reason someone would use a revocable trust is if there are children involved that who are possibly not being treated as an equal within the family. If we were to use a will in this circumstance to leave this person’s property the door is left open for a will contest. A will contest is an open forum. Your child gets an invitation to court and an opportunity to object to the disposition of assets. Having a trust eliminates or minimizes this possibility. Lastly, the third reason someone would be likely to use a revocable trust is if a client has assets out of state. For example, if a New Yorker also has a home in Florida and they want to leave this property to their children using only a will, Floridian courts might have a problem with New York disposing of their land. You would use a trust to minimize or avoid aggravation in the form of an ancillary probate proceeding where the executor would have to go through probate in New York and then down in Florida to transfer the Florida property. This minimizes a lot of expense and aggravation.