What Is the Role of a Key Holder in a Castle Trust?

In this episode of Berry’s Bites, Chris Berry answers the question: With a Castle Trust you mentioned the role of a “key holder” can you explain that more and is that different than a trustee?


Estate Attorney and Advisor Chris Berry of Castle Wealth Group answers questions on retirement and estate planning every Wednesday at 1pm. Register via this link or give our office a call at 844-885-4200.

Castle Wealth Group and Christopher Berry help families with estate planning, elder law, retirement planning, and tax planning from their offices in Brighton, Ann Arbor, Livonia, Bloomfield Hills, and Novi.

Castle Wealth Group helps families with their legal, financial, and tax planning for their retirement and legacy.

With the use of legal structures like revocable living trusts, Castle Trusts (asset protection trusts), Chris Berry and Castle Wealth Group can help your family plan, protect, and preserve what is important through their Retirement and Legacy Blueprint Process.


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Episode Transcript:

With the Castle Trust, you mentioned the role of a key holder. Can you explain that more? And is that different than a trustee?

Lets talk about, a special type of trust. So Castle Trust is an asset production trust. What we can do is we can move assets into the trust like real estate, and by us putting it inside of the trust, what we’ve done is two things. We’ve shielded it from lawsuits or creditors. So anything inside of the trust that’s protected.

And then also what we’ve shielded it from is the nursing home costs or long-term care costs that can run 10 to $15,000 per month these days. Because we have a governmental program called Medicaid that can pay for the nursing home costs. Qualify for Medicaid. There’s an asset test and there’s a five year look back period.

So that’s why people like to do the Castle Trust is because they can shield themselves and their family from devastating costs, long term care. That’s kind of the main reason. Now it is an asset protection trust, so it works a little bit different in terms of. How you get money out of the trust. But really there’s, there’s kind of three roles.

There’s first what’s called the trustee. That’s the person who creates the trust. That’s the person who’s in charge of the trust. And then we have the role of the key holder, and I’ll explain that in a moment. And then we have, uh, beneficiaries upon death. So with the role of trustee, you’re in control. You can decide to sell your property if you want to.

You can go from Google stock to Apple stock. You’re in complete control of how the assets are invested. You’re in complete control of whether you sell a property, you’re in complete control of where the money is housed. But let’s say you wanna take money out of the trust. Well, this is where it’s a little bit different, but this is what builds on the asset protection is that you would move the money out of the trust to what we call a keyholder account, which is like a joint account with one of the kids or something like that.

And then you could move the money back into your name and then you can spend the money. So that one little extra step, that’s what gives you the asset protection and that’s the escape hatch to get the money out of the trust. Now, key holder, Or the beneficiaries, they don’t know what’s inside of the trust.

They can’t take any money out. The key holder’s job is just to be an escape hatch, get the money outta the trust, and then when you pass away, the money can go. Whatever’s left over can go to your beneficiaries. So the role of the key holder, really, it’s just a one-time thing where you open up that key holder account and now that’s the escape hatch to get the money out of the trust.

This is how we can build in asset protection, but still give flexibility to pull the money out if we wanted. Because none of my clients would move forward with, uh, asset protection trust if they had to give up control. Like they wanna remain in control. So hopefully that was helpful.


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