A revocable living trust can make estate planning much smoother, but it comes with its limitations. While such a trust can have a huge impact on minimizing probate involvement when you pass away, it comes with limitations many are unaware of when going into their estate planning.
Here are some of the top myths regarding revocable living trusts that many people seem to believe.
Probate Can Be Fully Avoided with a Living Trust
This is the most commonly believed myth and can be the most damaging. Probate court procedures are, unfortunately, not fully avoidable. However, they can be significantly minimized with a proper living trust. In Connecticut, keeping your assets out of probate will lead to much less paperwork being filed, including the estate tax return, but there will still have to be some probate court involvement.
Estate Tax Can Be Avoided with a Living Trust
A living trust can certainly be made to include provisions that will address estate tax planning, but the same can be accomplished with a well thought out last will and testament. In Connecticut, the current estate tax exemption is $2 million.
Probate Court Fees Can be Avoided
It makes sense to think if you sort out your own affairs, the court won’t have fees. Unfortunately, this is not the case. Even if none of your assets go through probate, there will still be a charge based on the size of your estate. This includes all non-probate assets. While it is called a court fee, it operates much more similarly to a tax, which is how the probate court system is funded.
My Assets Will Be Protected if I End Up in a Nursing Home
Unfortunately, assets in a typical living trust are not protected from a nursing home or even other creditors. If this is the goal for your living trust, there are other types of trusts that could be used instead that better address your specific needs.
If you are considering a living trust but aren’t sure where to start, we can help. Our Elder Law attorneys at Jonathan Perkins Personal Injury Lawyers can help from start to finish, and educate you on the best estate planning and trusts for your individual needs. Contact us today for a free consultation.