| Revocable living trusts have become an increasingly | | | | by putting your assets into a trust of this nature, it will |
| popular option in estate planning for many reasons | | | | be possible to qualify for Medicaid benefits that you |
| including flexibility and potential savings. However, as | | | | would not otherwise be eligible for. This is not the case. |
| with anything of this nature, there are some | | | | 4. Does not cover all issues. A revocable living trust is |
| misconceptions about revocable living trusts which can | | | | not a complete estate plan - you may still need a |
| lead to potential problems without proper guidance. | | | | supplementary will, generally referred to as a pourover |
| The following is a list of some common potential | | | | will, as well as a healthcare power of attorney and/or |
| problems, all of which can be avoided with the | | | | a durable power of attorney. |
| guidance of an experienced lawyer. | | | | 5. Confusion about taxes. Trusts of this nature do not |
| 1. Lawsuits. Some people believe that assets placed in | | | | lower your taxes in and of themselves, although they |
| a revocable living trust are not subject to lawsuits, but | | | | can be part of tax planning that will result in lower |
| this is not the case. Only assets placed in a permanent | | | | taxes. |
| trust are exempt from lawsuits, although the interest | | | | 6. Forgotten assets. It is important to keep your trust |
| from assets in permanent trusts can still be included in | | | | updated as you acquire new assets or if you transfer |
| a lawsuit. Revocable living trusts offer more flexibility | | | | assets out of the trust. For example, if you choose to |
| than permanent trusts, but this flexibility also means | | | | take something out of the trust to refinance it but |
| that assets are protected in a different way. | | | | forget to have it transferred back into the trust, your |
| 2. Refinancing. When interest rates drop, many people | | | | heirs may have issues later. |
| look to refinance some of their assets such as houses. | | | | A revocable living trust can be an important part of |
| If those assets are in a revocable living trust, they | | | | your comprehensive estate plan, but it is important to |
| cannot be refinanced until they are removed from the | | | | understand the limitations of a trust of this nature. The |
| trust and the ownership is transferred back to the | | | | best way to ensure that your estate plan is both |
| individual. This is not impossible, but it does require | | | | comprehensive and complete is to get advice from a |
| some paperwork. | | | | trusted, experienced, and local estate planning lawyer. |
| 3. Medicaid qualification. A popular misconception is that | | | | |