Many of us eagerly anticipate our retirement years as a time to focus on the aspects of life we most enjoy. For some people, however, the enjoyment is prevented by worry about the potential to have assets swallowed up by unexpected expenses, long-term care costs, taxation, or other concerns.
You can protect your future and enjoy the present more when you have a plan in place to protect your retirement assets. The team at Huizenga Law can help you with a trust and other strategic plans to preserve your property while providing for future needs for yourself and your family.
Revocable Trusts
A trust is a legal vessel created to hold property. Trusts that you create during your lifetime are called living trusts while trusts set up in your will to be used after your death are known as testamentary trusts. Different types of living trusts can protect your retirement assets in various ways.
Many people set up revocable trusts to allow their property to pass to loved ones without the need for probate. This type of trust prevents family members from having to deal with delays and legal expenses after your death. It can also allow someone you’ve named to handle your property if you become incapacitated and incapable of managing your financial affairs. However, a revocable trust cannot provide protection from expenses.
Irrevocable Trusts
While all trusts technically gain ownership of the property placed inside, the ownership is not absolute with a revocable trust simply because it can be revoked. You can open it up and take out the property. That is not the case with an irrevocable trust. Once property is placed in an irrevocable trust, the original owner cannot remove it or cancel the trust. The trust holds onto it until the property is eventually distributed to the beneficiary of the trust.
Because the original owner gives up ownership of the property, their creditors cannot take the property. If the original owners owe money in the future because of a lawsuit or other unexpected debt, property in the trust is protected.
Benefits of an Irrevocable Trust
Once you transfer property into an irrevocable trust, it is no longer counted as yours. That means that if you are trying to reduce your holdings so that you can qualify to receive long-term care benefits from Medicaid to cover the cost of a nursing home, the assets you’ve moved to a trust don’t count against you. However, you need to move those assets at least five years before you expect to apply for Medicaid, or they will still affect eligibility. You need to plan ahead and take action long before the time you expect to need nursing home care.
Another benefit of moving property into an irrevocable trust is that you can reduce tax liability, both on your personal taxes and for estate taxes when you pass away. However, you should not transfer ownership of retirement accounts into the name of a trust, or you could run into tax problems. Your attorney can help you determine whether it makes sense to name your trust as a beneficiary of a retirement account or use your beneficiary designation in other ways to further your goals.
Huizenga Law Can Create the Right Plan to Protect Retirement Assets
You have earned the chance to enjoy your golden years. It’s okay to worry about whether your favorite team will win on Saturday, but you shouldn’t be troubled with serious worries about meeting your needs for the future. Huizenga Law can help.
Our team can develop a plan to meet long-term goals while preserving your retirement assets with a trust or other strategies. Schedule a consultation today to get started.
