People often treat detailed estate planning like a process that only benefits those with millions of dollars in personal assets, but nothing could be further from the truth. Neither estate planning nor trusts are only useful to those who are independently wealthy.
Working-class Americans can benefit from the creation of a trust as part of their estate plan. Far from only being a way to limit what resources a wealthy child can spend, a trust can help someone achieve many different estate planning goals.
A trust can protect your property from creditors
The care that you need as you get older may consume all of your retirement savings. In fact, you may wind up having a huge amount of medical debt because you need to live in a nursing home or have to undergo expensive cancer treatment.
The hospital or nursing home facility that you owe money to when you die can bring a claim against your estate. They can potentially demand every cent that you had hoped for your family to inherit unless you protect those assets by moving them into a trust.
Trusts can help you qualify for Medicaid benefits
If Medicare won’t cover all of your nursing home costs or medical expenses, Medicaid may be the only option other than paying for your care yourself. Unfortunately, you need to use most of your own personal property up before Medicaid will approve your application or cover your costs.
When you apply, Medicaid will look back at five years of your financial records, so advance planning can make qualifying a lot easier. Moving property into a trust now helps ensure you won’t have a delay in getting Medicaid benefits when you need them.
Trusts protect your legacy from family disputes
If people disagree about how to handle your estate, there could be challenges brought against your wishes in probate court. Going through probate court can consume thousands of dollars from your estate, possibly leaving very little for the people that you love.
One of the many benefits of creating a trust is the ability to limit what family members use their inheritance for and also to prevent conflicts between family members. Trusts can effectively eliminate unnecessary challenges and help support your legacy through the efforts of the trustee you appoint.
Understanding what benefits a trust offers can help you determine if adding one to your estate plan is a smart move.