February 17, 2025

When people hear the word “trust,” they often assume it’s a tool reserved for the ultra-wealthy to pass down millions of dollars to future generations. However, trusts are not just for the wealthy. In fact, they can be a powerful planning tool for individuals and families of all financial backgrounds. Whether you’re looking to protect your assets, avoid probate, or ensure your loved ones are cared for after you’re gone, trusts offer strategic benefits that apply regardless of net worth.

Below are three types of trusts that may benefit everyday individuals and families:

1. Revocable Living Trusts – Disability Planning & Probate Avoidance

A revocable living trust is one of the most versatile estate planning tools available. This trust allows you to maintain control over your assets during your lifetime, plan for potential incapacity, and seamlessly transfer assets to your beneficiaries after you pass away—without the need for probate.

Why Consider a Revocable Living Trust?

• Avoid Probate: Probate can be time-consuming, costly, and public. A revocable living trust ensures that your assets are distributed privately and efficiently to your chosen beneficiaries.
• Disability Planning: If you become incapacitated, the successor trustee you’ve designated can step in to manage your financial affairs without needing court approval.
• Flexibility: Since it’s revocable, you can amend or dissolve the trust at any time during your lifetime.

2. Asset Protection Trusts – Medicaid Planning and/or Lawsuit Protection

For those who are concerned about protecting their assets from creditors, lawsuits, or long-term care costs, an asset protection trust can provide a valuable shield. These trusts can be structured in different ways depending on your specific needs and financial goals.

Two Key Uses of Asset Protection Trusts:

• Medicaid Eligibility: If you anticipate needing long-term care in the future, a properly structured Medicaid Asset Protection Trust (MAPT) can help you qualify for Medicaid benefits while preserving assets for your heirs. However, this requires advanced planning, as Medicaid has a five-year look-back period for asset transfers.
• Lawsuit Protection: Certain irrevocable trusts can protect assets from potential lawsuits, making them a strategic option for professionals, small business owners, or individuals in high-risk occupations.

3. Standalone Retirement Trusts – Estate Planning for Blended Families

A standalone retirement trust (SRT) is a specialized type of trust designed to hold retirement assets, such as IRAs or 401(k)s, while maximizing tax benefits and ensuring proper distribution.

How a Standalone Retirement Trust Can Help:

• Dual Purpose for Blended Families: If you’re in a blended family, an SRT ensures that your surviving spouse has access to retirement assets while preserving the remaining balance for your children or grandchildren.
• Protection from Creditors & Divorce: Unlike leaving retirement accounts directly to beneficiaries, an SRT can protect inherited funds from creditors, lawsuits, or even a beneficiary’s future divorce.
• Stretch IRA Benefits: With proper structuring, an SRT can allow your heirs to stretch distributions over their lifetimes, potentially reducing tax burdens.

Trusts Are Not Just for the Wealthy

Trusts are powerful tools that can provide financial security, asset protection, and peace of mind—no matter your net worth. Whether you are looking to avoid probate, safeguard assets, or ensure your retirement savings are used wisely, there is a trust strategy that can work for you.

If you want to explore whether a trust is the right solution for your financial and estate planning goals, reach out to Omni Legacy Law today. Our legal team can help you navigate the best trust options for your unique situation and ensure that your legacy is protected for generations to come.