Things Not to Do

8 Sept 2023 · 1 min

Watch on YouTube

1:01

In this concise video segment, estate‑planning attorney Jerry Taylor outlines five frequent errors people make with trusts. He explains that a revocable living trust does not shield assets from Medicaid’s recovery of long‑term‑care costs, and that only an irrevocable trust can protect against creditors or lawsuits. He warns that beneficiary designations on life‑insurance policies or IRAs override trust provisions, so mismatched designations can defeat the trust’s intent. He stresses that trusts require ongoing updates to reflect life events such as births, deaths, marriages, and divorces. The segment ends by introducing a fifth, most important mistake, though the content cuts off before it is described.

Chapters

Mistake number 1, thinking that a revocable living trust will somehow protect you from long-term care Medicaid recovery. It will not. Depending on the state you live in, Medicaid will have a right to recover any and all long-term benefits they paid on your behalf in a nursing home. In some states, they can put a lien on your house. In other states, they can put a claim in on your probate estate after you die. Mistake number 2, thinking that your trust will protect you from creditors and lawsuits. It will not. That requires an irrevocable trust. An irrevocable trust is not in your name, and that's how you get the protection. Mistake number 3: when you have beneficiary designations on your life insurance or your IRA that conflict with what you put into your trust, the designations will prevail regardless of what you put in your trust. Mistake 4: failing to update your trust. A trust is not a one-and-done situation. Your life changes. New people come along. People are born. People die. People get divorced. As those changes happen in your life, your trust must reflect those changes. And number 5, and the most important of