Other advantages that can be incorporated by an estate planning attorney include asset protection for one’s spouse after death, special needs planning for disabled beneficiaries, asset management and protection for children who are not proficient with handling money, protection of assets from a spouse’s subsequent marriage, disability planning, asset protection for children if in bad marriages or to ensure assets don’t go to the in-laws, keeping affairs private, no court intervention required and planning for proper management of one’s business.
While a revocable living trust has many advantages, Coutlee said it does not protect one’s assets from a nursing home, lawsuits, divorce bankruptcy or other creditors.
A irrevocable trust will. A irrevocable trust may prohibit one’s right to control the trust (as trustee) or have access to one’s assets, but one gets to decide to what extent.
According to Coutlee, it is a common misconception that irrevocable trusts, once created, cannot be changed. He said it is true of many irrevocable trusts created to avoid taxes, it is not true of all irrevocable trusts.
“An irrevocable trust is a trust that you create for the benefit of yourself or others and once created, you, as grantor, must give up your rights to something,” Coutlee said.
Coutlee said a typical income-only irrevocable trust permits one to receive the income on assets, but one must give up his right to his principal. In some irrevocable trusts, according to Coutlee, one can retain the right to change who gets assets during his life and after his death, and maintain 100 percent control of his assets until his mental disability or death.
Appointing a power of attorney
According to Coutlee: “You certainly want to trust the person or people you put in this position, which is to make decisions for you if you become sick or disabled, either temporary or permanently. This person or people will essentially be stepping into your shoes,” he said.
Coutlee said there are many different structures one can use when selecting a power of attorney (giving someone individual rights, use a majority rules, giving collective rights, etc.), but do not assume spouses will assume the role naturally.
“It is extremely important to have this document in place,” he said. “It is one of the most cost-effective document of an estate plan you can implement.”