February 05, 2017
The Castle Trust (Modern Asset Protection Trust)

Most of the clients of The Elder Care Firm are not concerned about protecting against estate taxes because they do not have over $5.49 million, instead they want to avoid probate, protect against long-term care a provide a legacy to their children. One of the best tools estate planning lawyers have in their tool box to assist with these goals is the modern asset protection trust, the Castle Trust.
Incorporating a Castle Asset Protection trust makes sense for many Michigan estate planning families for a variety of reasons. Typically clients like the flexibility, asset protection, and simplicity provided by the Castle Trust.
What Can You Do with a Castle Trust in Michigan?
With a Castle Trust, you can:
- Avoid Probate
- Provide Asset Protection for Your Children
- Provide Asset Protection for You
- Protect Against Long-term Care Costs
- Protect Against Lawsuits
- Avoid Trustee Problems
- Protect Against Market Risk
- Leave a Legacy for the Next Generation
The Castle Trust vs. a Revocable Living Trust
The biggest difference between the traditional Revocable Living Trust (RLT) and the Castle Trust is that the Castle Trust can protect your assets from creditors and nursing homes. The Castle Trust is a modern form of irrevocable trust that allows you to change beneficiaries, change trustees and get assets back into your name at any time.
How is a Castle Trust Taxed?
The Castle Trust income is taxed to the owner. Assets in the Castle Trust are tax neutral and get, essentially, the same tax treatment as if the Grantor did not did not put the assets in the Castle Trust. This also means that a Castle Trust will not avoid estate taxes; HOWEVER, the federal estate tax only applies to estates greater than $5,490,000, which is less than .5% of all estates. The Castle Trust assets gets no different capital gain, income or gift tax consequence than if the Grantor was still the owner at death which means the death beneficiaries retain the ability to get a step-up in tax basis.
Why Create a Castle Trust?
Perhaps the strongest reason to create a Castle Trust is its great flexibility to meet a wide range of needs. With a Castle Trust you can maintain control of your assets (unlike outright transfers of assets to a child or to an Irrevocable Trust), while at the same time protecting your assets from probate (unlike wills) and from creditors and nursing homes (unlike Revocable Living Trusts).
Learn More about The Michigan Asset Protection Trust (Castle Trust)
If you’d like to learn more about the benefits of a Castle Trust and what it can do to protect you, your family, and your assets, then you should register for one our upcoming LifeCare Planning workshops where we discuss estate planning and elder law issues, including trust planning with the Castle Trust.
