If you are single, your assets titled to your Revocable Living Trust (“trust”) will not be protected from creditor claims while you are alive. Your assets will be subject to claims whether the asset is titled in your individual name or the name of your trust. However, a properly drafted trust would allow asset protection for your beneficiaries after you pass away.
Likewise, if you are married, your assets titled to the trust are not protected from possible creditor claims. For example, if either you or your spouse is involved in a car accident, your assets are subject to any claims brought forward. However, after the first spouse passes away, a properly drafted and administered trust would afford the surviving spouse asset protection on the deceased spouse’s one half of the community property and all of the deceased’s spouse’s separate property.
What can the asset protection include for a surviving spouse and beneficiaries in a properly drafted trust? Protection from creditors, divorce and long term care spend-down as it relates to Medicaid. For example, if your spouse remarried, your interest of the trust would be protected from your spouse’s new husband/wife if they later divorced. The same divorce protection holds true for the share your trust leaves for your beneficiaries after you pass away.
Is your trust drafted properly to capture asset protection for the surviving spouse? How about for your beneficiaries? I often review trusts executed in Arizona or in other states that don’t include the necessary provisions to capture asset protection for the surviving spouse and/or beneficiaries. Whether you are single or married, it’s critical to have your existing estate plan reviewed by an experienced estate planning attorney to ensure your plan is up to date to include law changes, asset protection and personal changes.
About Morris Hall:
At Morris Hall, we have focused our legal practice on estate planning for over 40 years. Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects. We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead. Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe. Contact us today at 888.222.1328 to schedule an appointment!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.