A revocable living trust is a type of trust that you can create and change at any time. You can also access and use the assets in the trust as you wish. A revocable trust can have some benefits, such as avoiding probate, maintaining privacy, and managing your assets in case of incapacity.
However, a revocable trust generally does not protect your assets from creditors or lawsuits, either during your lifetime or after your death. This is because you still have full control and ownership of the trust assets, and you can revoke or amend the trust at any time. Therefore, your creditors can reach the trust assets to satisfy your debts, and your beneficiaries’ creditors can reach the trust assets after they inherit them. One exception is if the asset, such as real estate was transferred and remained in the revocable living trust before May 1, 2002. Then after death, it would not be subject to Medicaid claim for recovery for payment of care of the decedent, for example.
A revocable trust may be recommended for you if you have the following goals or situations:
• You want to avoid probate, including out-of-State real property which involves a probate court, which is a time-consuming and costly process. This can also be accomplished in Indiana by placing payable on death/transfer on death designations on any accounts, or assets.
• You want to maintain control and flexibility over your assets, and you do not have any concerns about creditors or lawsuits.
• You want to plan for your incapacity, which is the inability to make or communicate your decisions. This can also be accomplished by a properly drafted Durable Financial Power of Attorney other than a trust.
• You have a large or complex estate, and you want to simplify the distribution of your assets to your beneficiaries. You can name the beneficiaries and the terms of the trust and avoid the hassle of updating multiple beneficiary designations.
A revocable trust is a useful tool for estate planning, but it is not suitable for everyone. It depends on your personal and financial situation, your goals and preferences, and the laws and regulations in your State. Therefore, it is advisable to consult a professional advisor, such as a lawyer, accountant, or financial planner, to help you decide whether a revocable trust is recommended for you and your assets.