The money you worked hard to accumulate may hurt you as you age. If you do not implement a sound asset protection plan, Medicare and others may use your net worth against you.
Asset protection ensures that your property and assets do not count against you should you need medical care. An irrevocable trust is one type of fiduciary tool you can implement to protect your assets to pass to your heirs. Discover what a trust like this can and cannot do to keep your financial legacy intact.
What does an irrevocable trust do?
A trust is an account or depository within which you place property. The most common items held in a trust are cash and property deeds. Unlike other types of trusts, an irrevocable one permanently takes the items you place out of your inventory unit the terms of the trust come into play. In most cases, you cannot remove or reclaim the items for yourself.
What are the benefits of asset protection?
When you deposit items into the irrevocable trust account, they are no longer at your disposal. They become the trust’s property and those you have named as grantees or recipients. The assets within the trust no longer count as part of your net worth. Medicaid and other creditors cannot get access to these assets. Not only does it help with your tax liabilities, but a trust such as this also protects money from lawsuit judgments and seizures.
Of course, if you set your trust up on the eve of a lawsuit, a judge may rule the action invalid and allow a judgment to come from the trust. Therefore, the more advanced the planning, the better the chance that the assets within the trust will remain safe for your heirs.