Revocable Trusts

What is a Revocable Trust?

A Revocable trust is a living trust created by a written agreement between the person setting up the Trust and the person chosen to manage the assets in the Trust. You may designate yourself to serve as trustee. You may revoke or change the Trust at any time. You may reserve the right to withdraw income and principal at any time. The terms of the Trust Agreement should be tailored to meet your specific needs and objectives.

A Revocable Trust Avoids Probate

The terms of the Trust typically designates the beneficiaries of the Trust. Upon the termination of the Trust, the Trustee will distribute the Trust assets to the designated beneficiaries outside of the normal probate process.

Supplemental Needs Trust as Part of Beneficiary Clause

A Supplemental Needs Trust is a trust which provides for a person with disabilities. Under this type of trust, the person with disabilities would receive distributions to supplement any benefits he/she was receiving from governmental programs. The person with disabilities would not be disqualified from receiving such governmental benefits. By making a Supplemental Needs Trust part of the beneficiary clause of a Revocable Trust, the person with disabilities will be quickly provided for without the delays and costs of Probate.

Revocable Trusts Can Minimize Estate Taxes

By establishing separate Revocable Trusts with the appropriate language, each spouse can utilize New York and federal estate tax exemptions.

Revocable Trusts Provide for Asset Management in the Event of Incapacity

If you establish your own Revocable Trust and later become incapacitated, your designated Successor Trustee could take over with virtually no difficulties. This allows for your estate planning investments to remain intact with an easy transition to your designated successor. You also can provide whether your Trustee(s) or Successor Trustee(s) can act separately or must act jointly.

Revocable VS. Irrevocable Living Trusts

Under the Medicaid laws, any assets that you can withdraw from your trust are not protected. Medicaid will require you to use those assets towards the cost of care. A Revocable Trust does not protect a person's assets in the event of a catastrophic illness. Since you can revoke the trust, Medicaid can force you to revoke the trust and withdraw all the trust assets and use those assets towards the cost of care.

The only type of trust that will truly protect resources in the event of a catastrophic illness is an irrevocable trust , where the language of the trust agreement appropriately complies with the federal and state Medicaid requirements.

Revocable Trust + Long Term Care Insurance

For those who do not want to use an Irrevocable Trust to protect your life savings, but still desire to achieve the other benefits of having a Trust, then a Revocable Trust is ideal. If you also want to protect your life savings with a Revocable Trust, then purchasing Long Term Care Insurance should be considered.