how does a revokable trust work?

[packrat]

Just read post 6044 - a person matter. My friends mother died and her sister
had to come across the country and help her with finances because she was the oldest sibling.

For me, this would be a disaster. I won't get into details, but it has to do with adoption and
parental meddling. We have been estranged for decades. We're both happy this way.

It was suggested to me that I could direct where I want it all to go with a revokable trust
and me as the trustee, and that when I pass, the next in line in this trust could take over
and it would become a nonrevokable trust at that time.

I could put my wishes in this trust or a will, but I will will takes years in probate, while a
trust would probably be a few weeks.

I'm not a rich person by any measure, but I do own my home, and sometimes distant
relatives ask personal questions that only circling vultures would ask.

Any experiences with this sort of thing, or advice, would be most welcome.
I'd like some idea of what I might be getting into if I choose this route.

 

[Lon]

It means that YOU as the TRUSTEE have the right to change the provisions of the trust. A IRREVOCABLE TRUST would mean that the trust could never ever be changed.

 

[packrat]

Well, gee, I knew that, but thank you.
Just because I can, doesn't make it a well advised idea.
I'm looking for someone with some experience with this.
Experience is a good teacher... I try to be a good listener.

 

[Butterfly]

Well, gee, I knew that, but thank you.
Just because I can, doesn't make it a well advised idea.
I'm looking for someone with some experience with this.
Experience is a good teacher... I try to be a good listener.

As a person with some experience in this area, I would strongly suggest that you see an attorney to get this question answered. Trusts are very complicated and can be a veritable minefield.

See if you have a senior citizens' law office in your city; they almost have an attorney with trust/estate expertise, and they charge a much reduced fee for their services. Failing that, it would be well worth spending the money to seek out legal advice from another trust/estate attorney. Trying to do this on your own or on the advice of well meaning (and perhaps misinformed) friends would be a bit like trying to take out your own appendix.

 

[packrat]

Any experiences with this sort of thing, or advice, would be most welcome.
I'd like some idea of what I might be getting into if I choose this route.

As a person with some experience in this area, I would strongly suggest that you see an attorney to get this question answered. Trusts are very complicated and can be a veritable minefield.

Exactly! What I'm looking for is that experience. OH. um. YOUR experience. Before I share with my trusted lawyer
I want a little knowledge from a few people if it can be had here. What things didn't work the way they
thought it would... or for example, failing that, some backfires on a will, so I know some things to avoid that my
lawyer and myself might not think of.

Sorry for the awkwardness. I really don't like thinking of myself in the past tense.
I'm just poking around looking for experiences and advice based on those experiences.

 

[Butterfly]

If you find an attorney who specializes in trusts and estates, you can believe that he or she will think of anything that can go wrong. Ask him/her any questions you may have. There is very little that most lawyers haven't seen. This is their day job, after all.

Any information you get on a message board would likely be useless anyway, because that kind of law is state law and varies from state to state.

I can't advise you in any way except to advise you to see an attorney. To do otherwise would be practicing law without a license, which is illegal.

 

[mathjak107]

the biggest issue with revocable trusts is they are revocable and do not qualify for most of the perks that irrevocable trusts do .

irrevocable trusts have tax benefits as well as estate tax benefits . they also keep assets from being counted or taken by medicaid .

while revocable trusts are good at keeping things out of probate they have a huge flaw .

a home held in your name is protected from medicaid as well as up to a point the home value is not counted as an asset for qualifying for medicaid if you need long term care .

once the home goes in to a trust , while it is protected in the sense that medicaid can't take anything not going through probate , you lose the fact the homes value is not counted for qualifying for medicaid . the home loses it's protected status once it goes in to a revocable trust .

you may actually have to sell the home , spend the dollars down just to qualify for medicaid . in my book that fact alone can be a deal breaker with using any trust that is revocable unless i had a reason like minor children to deal with or special needs children .

irrevocable trusts can be mine fields so unless you need one it is best to avoid them .

we use what are called irrevocable disclaimer trusts . these are basically transparent with an option to throw the switch to put them in effect up to 9 months after a spouses death .

we needed them to avoid new yorks estate tax cliff when it was lower . ny has a crazy structure . if you go over the yearly limit for estate size by more then 10% then the estate is not taxed on just the overage . you lose the entire exclusion and pay tax from dollar one .

so we needed an irrevocable trust so if need be we can pass 2x the states limit . the disclaimer trust was perfect for that but it is useless as far as protecting assets or medicaid planning .