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Difference Between Revocable Trust and Irrevocable Trust - YouTube
Channel: Elder Needs Law, PLLC - Medicaid Planning Lawyers & Elder Law Attorneys
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What's the difference between a revocable living聽
trust and an irrevocable trust, we get these聽聽
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concepts are often confused. a revocable living聽
trust is a very valuable estate planning tool.聽聽
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The idea is you take assets that you have now you聽
put them into your name, whether it's your house,聽聽
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whether it's your bank accounts, all sorts of聽
assets, put it into a revocable living trust that聽聽
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you are both the trustee of, and that you are both聽
the beneficiary. So you are the creator of the聽聽
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trust, you are the trustee of the trust, you are聽
the beneficiary of the trust while you're alive.聽聽
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And the benefit to that is when you聽
become if you become incapacitated,聽聽
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you can designate someone to take over and be in聽
control of all those assets that you've placed in聽聽
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the trust. And then the reason why most people use聽
a revocable trust is after you have passed away,聽聽
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the assets remain in that trust. And聽
the trustee then becomes irrevocable.聽聽
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And the trustee has to follow the instructions聽
that are left behind, which says who gets what聽聽
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and when. And you get to do that without going聽
to probate court. Because if you are relying on聽聽
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your state planning just based on your will, that聽
just means you're doing a probate court, and then聽聽
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the judge follows your will. And that takes time聽
that takes a lot of extra money. So vocable Trust,聽聽
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avoid that time, expense and hassle. All right,聽
that's a revocable trust. revocable trust also聽聽
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offers nothing by way of asset protection to you聽
assets that are in your revocable living trust,聽聽
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from a creditor perspective, are in your name,聽
and attachable, and liable and garnish trouble and聽聽
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all that good stuff, there's really no聽
protection for your assets while you are alive.聽聽
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But when you pass away, the revocable trust, again聽
becomes irrevocable. And if it's drafted properly,聽聽
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the beneficiaries of those assets can聽
enjoy some asset protection. So again,聽聽
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that's only after you've passed away. Now聽
contrast that with an irrevocable trust,聽聽
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we often are dealing with these in a Medicaid聽
planning context, I work with people who聽聽
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have want to plan in advance to protect聽
what assets they've worked so hard for聽聽
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and want to make sure that they don't have to聽
waste all of it on home healthcare is paying聽聽
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for home health care facility, facility care or聽
nursing home care, because these long term care聽聽
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costs can be quite expensive. So for that, we turn聽
to an irrevocable trusts and irrevocable trust聽聽
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offers asset protection while you're alive with聽
it's a little bit over simplistic, it's assuming聽聽
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you're not already in debt, right? You can't,聽
if you have a debt, and you have a creditor聽聽
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who's kind of like looking to attach, you can't聽
just throw everything in an irrevocable trust,聽聽
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and expect it to be fine. So it's not really what聽
we're not doing for people who have debts. Now,聽聽
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we're doing it for most people who really the聽
biggest threat to your bank account is likely not聽聽
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these other third parties, it's likely the cost of聽
long term care. So an irrevocable trust, the idea聽聽
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is that while you're the creator of the trust,聽
you are not the trustee, and you are not the聽聽
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beneficiary of it. So because you have no control聽
over what happens to the assets in that trust,聽聽
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creditors can't touch it. And also, after聽
five years, Medicaid cannot count it against聽聽
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you. There's a lot of benefits of that.聽
Now, a lot of people get very nervous聽聽
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when I bring up the fact that they can't be the聽
trustee for their own trust. And that that is聽聽
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true. So we're not doing this. We're not we're聽
not doing this willy nilly. We're doing this聽聽
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after careful thought and consideration. So a聽
few security features are built in. The first one聽聽
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is we give you as the creator of the trust of an聽
irrevocable asset protection trust, the ability to聽聽
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hire and fire the trustee. So you yourself can聽
never be a trustee, you can select the people who聽聽
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are so that offers some measure of protection,聽
make sure that they're doing the right then,聽聽
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and you're always entitled to an accounting and聽
you get to know what's going on. The The other聽聽
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aspect that we like to incorporate into that is we聽
don't put everything into the irrevocable trust,聽聽
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we leave a significant amount of assets聽
outside of the trust. So you don't have to聽聽
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rely on a trustee doing the right thing so you聽
can live your life. And then so then what happens聽聽
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is the irrevocable trust, after you pass away,聽
also doubles as your estate planning. Right. The聽聽
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revocable trust becomes irrevocable now you have聽
an irrevocable trust that stays irrevocable, and聽聽
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dictates what happens to your assets after you've聽
passed away. So it offers you asset protection聽聽
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while you're alive, that offers you you and聽
your heirs asset protection after you've passed聽聽
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away. And if you do need long term care, after聽
five years of utilizing the irrevocable trust,聽聽
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everything in that trust essentially becomes聽
invisible as far as Medicaid is concerned.聽聽
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So it can be a wonderful tool for people to use聽
at the right time. I've watched in my Medicaid聽聽
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planning practice, that I certainly have a聽
number of clients who they need help now and聽聽
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So they're not going to be a good candidate聽
for using the irrevocable trust because they聽聽
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don't have they don't want to wait five聽
years. They want to get help as soon as聽聽
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possible. So for those folks, we have聽
lots of other planning tools available,聽聽
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just not the irrevocable trust. So聽
I hope that answers the question.聽聽
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The difference between the revocable trust and the聽
irrevocable trust. Sometimes we're using revocable聽聽
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trusts and irrevocable trust together and that's聽
a whole other video. So we'll talk about that.聽聽
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And if you're interested in learning more, please聽
schedule a consultation. Visit elder needs law.com聽聽
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we service clients all throughout the state of聽
Florida. Take care. Thanks for watching.
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