| Times Herald-Record
Many questions are raised by the topic of Revocable Living Trusts. Following are answers to some of the frequently asked questions.
Can I act as my own trustee? Yes, if you are competent to handle your legal and financial affairs. If you are married, both spouses can act as co-trustees.
What can I do with assets once they are in the Revocable Living Trust? As your own trustee, you can do anything you want with trust assets. When you create the trust, you may transfer real estate, bank accounts and investments into the trust. You manage trust assets for your own benefit. You may spend, save or invest trust assets and have a right to all income and principal.
Will my Revocable Living Trust avoid income taxes? No. The purpose of the Revocable Living Trust is to avoid probate on death and guardianship proceedings in case of incapacity. You may also leave assets on death to Inheritance Protection Trusts for the children to keep the inheritance in your own bloodline for the children and grandchildren and protect the inheritance from children’s divorces and creditors. If you are the trustee of your Revocable Living Trust, you file income tax returns the same way you filed them before. There are no new tax returns to file and no new tax liabilities are created.
If I transfer my house and other real estate into my Revocable Living Trust, will my property taxes increase? No. Transferring real estate to a Revocable Living Trust has no effect on your property taxes.
If I am only part owner of a real estate, can I transfer my share into a Revocable Living Trust? Yes. Your partial ownership share can be transferred to the Revocable Living Trust without affecting the interests of co-owners.
If I move to another state, is the Revocable Living Trust still valid? Yes. Your Revocable Living Trust is valid in all 50 states, regardless of where the trust was originally signed.
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Does a Revocable Living Trust make sense for a single person? Yes. If you are unmarried, divorced or widowed, a Revocable Living Trust saves time and money on death by eliminating probate, which is when wills are used, and avoids a guardianship proceeding if you become incapacitated.
Are there any major disadvantages to a Revocable Living Trust? No, because you control the assets in the trust. If you are competent, you may amend the trust if you change your mind about beneficiaries, percentages to beneficiaries, and backup trustees.
Does a Revocable Living Trust protect my assets from nursing home costs? No. You have the right to be your own trustee in a Revocable Living Trust and you have the right to all income and principal so trust assets are not protected from nursing home costs if you apply for Medicaid to pay for the care. The irrevocable Medicaid Asset Protection Trust protects trust assets after the assets are in the trust for five years.
Bonnie Kraham is an attorney practicing elder law estate planning with Ettinger Law Firm, 75 Crystal Run Road, Middletown. She can be reached at 845-692-8700, ext. 119 or email@example.com. This column is intended to provide general information, not legal advice.