Do I Need A Trust in Retirement?

Worried about how to protect your assets in retirement? You’re not alone. One recent study found over half of Americans are worried they won’t be able to achieve financial security in retirement. Plus, a whopping 80% reported concern over the rising cost of long-term care. The best way to protect against both of these worries is with a trust.

What is a trust?

A trust is a legal arrangement in which property or assets are held by a trustee (a person or firm you select) for a beneficiary (in this case you). The trustee agrees to manage the property and assets according to the wishes you set forth in the trust agreement. You can transfer assets to the trust—such as your home, vehicle, investments or bank accounts—but still use them to your benefit. Think of it like a box that contains your wealth.

That said, why would you want to create a trust in retirement? There are a few distinct reasons, including avoiding probate, planning in case of incapacity, or protecting your assets against long-term care costs in the event you need a nursing home.

Are trusts only for the rich?

Despite the practical benefits, it’s a common misconception trusts are only for the rich, even in retirement. Trusts benefit people at all levels of wealth, and anyone can create one. Though there are many to choose from, there’s one in particular every retiree should know: the asset protection trust.

What is an asset protection trust?

An asset protection trust is an irrevocable trust that offers protection of your assets against creditors. Asset protection trusts also bypass probate, which will save your family time and money. And it could help your heirs save money by reducing their tax liability.

That strong asset protection is an important feature for retirees worried a nursing home stay could deplete their nest egg. Having one in place could, for instance, shield your home from being lost. But there is one important catch. In order to achieve this protection, your assets must have been placed in the trust at least five years prior. And, as you may have guessed from the term “irrevocable”, you can’t revoke the trust once it’s established.

Should you get an asset protection trust?

Because every person’s situation is unique, the best way to determine if an asset protection trust is right for you is to talk with an experienced estate planning or elder care attorney. And remember—because your assets must be in the trust for at least 5 years in order you to enjoy its full protection—it’s best to chat with an attorney sooner rather than later.

At AlerStallings, we know planning for topics like long-term care can be difficult to discuss, and we’re committed to making the conversations as easy as possible; with no jargon, impersonal service, or a bill every time you have a question.  We do everything with heart, including finding the solution that’s truly right for you.  Start the conversation with a free consultation.