Why You May Want a Michigan Asset Protection Trust

A common question is why should I consider a Michigan asset protection trust instead of a basic revocable living trust. To answer the question we need to compare what an asset protection trust (like a  Castle Trust) can accomplish versus a revocable living trust.

Revocable Living Trust

A revocable living trust is a trust that can avoid probate and control the distribution upon death.  Both are important goals.

Probate in Michigan should almost always be avoided because its a court process, its time consuming and it can be costly.  Typically, 3-5% of assets can be eaten up in probate court. There are inventory fees, publication fees, court costs, filing fees and sometimes attorney fees.  Yuck, no thanks.

Michigan probate is also time consuming.  By statute it takes at least 5 months to go through the probate process.  Sometimes, especially if real estate is involved it can take over a year.

Probate avoidance is important.

Also, with a Revocable Living Trust you can control the distribution upon death. You can decide how and in what manner you will leave your assets to your beneficiaries.  For example, you can leave things outright to your beneficiaries or you can leave it to them in trust so its protected from creditors, divorces, etc.

So, a living trust sounds great right?  What can’t it do?  Well, a living trust offers YOU no asset protection.  Meaning if you set up a revocable living trust, it does not protect against lawsuits or the devastating cost of long-term care.

Enter the asset protection trust.

Michigan Asset Protection Trust

With a Michigan Asset Protection Trust (Castle Trust) you can not only avoid probate, control the distribution upon death, but now you can add asset protection for your life from long-term care costs and lawsuits. So, think of it as a living trust + more.  The Castle Trust or asset protection trust has all the benefits of a revocable trust, with the added benefit of protection against the devastating cost of long-term care.

How Does an Asset Protection Trust Protect Against Long-term Care Costs?

An asset protection trust, like a  Castle Trust, can protect against the devastating cost of long-term care by relying on the current laws and regulations of how we pay for long-term care.  There are two governmental programs that help pay for long-term care currently, one is the VA Benefit, the other is Medicaid (which has a five year look back).

An asset protection trust can start a five year clock, where if you make if five years, everything inside the trust would be protected from the nursing home or Medicaid spend down.  This is important because a nursing home in Michigan these days runs over $8,000 per month or more.

By setting up the trust, the assets in the trust, such as real estate and brokerage accounts can be protected, with Medicaid paying the base level of care and the pot of resources inside the trust protected.  The assets in the trust can be utilized to pay for additional services….or if married, can ensure the healthy spouse is not completely impoverished paying for care.

Want to Learn Which Type of Trust You Need?

Attend a Free Workshop I recommend you attend one of our upcoming workshops, where an elder law attorney will walk through 3 easy steps to plan for the second half of life and discuss in detail the difference between a revocable living trust.  We call these free workshops Clarity Building Workshops because many families feel a sense of clarity when the workshop is done.  They are free to attend.

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