Almost any type of property can be held in trust, including real property (such as a home or land), investments (such as stocks), personal possessions, vehicles, or money in a bank account.
Do You Need a Revocable Trust?
Many people use revocable trusts (otherwise known as living trusts) to avoid probate. Revocable trusts can also be used as an incapacity planning tool for handling financial matters.
Trusts are not for everyone. They can be expensive to set up. You must be sure to put all of your property into the name of the trust. This is a very common mistake that can undermine the effectiveness of the trust as a probate avoidance tool.
On the other hand, establishing a trust can give the settlor a lot of control. The settlor can specify how trust funds and property are to be handled during his or her lifetime and even after death.
Trusts can be used to protect a vulnerable person from fraud or unscrupulous lenders by limiting the person’s ability to access or borrow against trust assets.
Unlike a will that must be probated, distributing property from a trust can be handled privately without going to court.
What a Revocable Trust Does Not Do
There are some common misunderstandings about what a revocable trust can be used to accomplish. Revocable trusts cannot be used to qualify for Medicaid. Creditors can still collect from money or property held in a revocable trust. Revocable trusts do not affect whether or not your estate will owe taxes.
