The other day, we received an email and phone call from someone who needed an estate plan. Shortly into the process, the client’s son met with another elder law attorney, who provided conflicting information. They made the right decision by asking us to clarify the discrepancies so they could map out the best path forward in their estate planning journey.
What should anyone do when they read something, speak to legal counsel, and get advice that conflicts with another source or person? People who need attorneys visit websites, read blogs (just like this one), visit social media sites, and have consultations because they deserve the correct representation. Regardless of where you pull the information from, there is a relatively high chance that you get conflicting information about long-term care, estate planning, or protecting a loved one.
Filter Out Information
Even if you are new to estate planning or elder law, you have intuition and gut feelings. You can go anywhere and search for information that will confirm the wildest of ideas. The thing to remember is that you have a voice that tells you whether something is reliable. Keep that in mind even as we talk to you about these two topics where there is often information at odds with itself.
Attorneys Advocating For Revocable & Irrevocable Trusts
More elder law attorneys are in north Georgia than in the last ten years. Some people will say we recommend a revocable trust as an estate planning tool rather than one for asset protection. A potential client may hear that, speak to another attorney, and then be told they need an irrevocable trust. Making the wrong decision has significant consequences, and the client doesn’t want to commit to something potentially harmful. This person has two different attorneys advocating for two different types of trusts. Here are three things to remember if you run into this message:
- Ensure you understand that irrevocable is precisely what it implies; it cannot be reversed.
- If someone is recommending an irrevocable trust to you as an asset protection tool, remember that you are giving up ownership of the asset that you are placing in the irrevocable trust.
- There are penalties for giving up ownership, such as Medicaid look-back periods. If you are trying to protect an asset because you are going into a nursing home, you must ensure that it is several years away—which is almost impossible to know.
If you use an irrevocable trust, you are taking a chance. If an attorney recommends one, they must tell you what we just mentioned. Imagine committing to an irrevocable trust and putting your home in it. A year later, you decide to downsize and sell your home. You won’t be able to do it because you no longer own the home.
With a revocable trust, you still have access and ownership. There are no penalties for retaining ownership, and therefore, there are no negative consequences. Even if you decide to dissolve the revocable trust completely, you can. You won’t find yourself in the couple’s position when they choose to sell their house after making an irrevocable trust. Don’t use a revocable trust to protect your most significant asset (your home) because it is already protected if you don’t do one thing: Give up ownership.
If someone suggests something, ask them whether you are giving up ownership and if there are any penalties associated with it.
We Don’t Sell Revocable Trusts
We provide peace of mind through tools such as revocable trusts. Despite our efforts to promote them, our sole purpose is to ensure you have the correct information before making a significant estate-planning decision. We would happily speak with you if you have further questions about your circumstances. Schedule your consultation with us here.
Kevin Tharpe
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