3 Reasons You May Want a Castle Trust as Part of Your Estate Plan
Many people have a revocable living trust as part of their estate plan. But, in reality, instead of a revocable living trust, you may, instead actually want a Castle Trust. A Castle Trust can do everything a revocable living trust can do, but it can do more.
Reason #1 Why You May Want a Castle Trust: Probate AvoidanceMost people want to avoid probate. It's time-consuming, it's costly and it can easily be avoided. In Michigan, at least, the probate process takes, by statute, over 5 months to complete. Often it can take over a year or longer for assets to go through probate court. Also, probate can be costly. The average cost of probate can easily range between 3%-5% of assets that get eaten up in filing fees, inventory fees, publication fees, etc. All of this can be avoided.
A living trust avoids probate. A Castle Trust also avoids probate. Just having a will does not avoid probate. So, the first goal achieved by having a Castle Trust is probate avoidance.
Reason #2 Why You May Want a Castle Trust: Control of DistributionWith a Castle Trust, you can control the distribution upon death of where your assets go and how they go to your beneficiaries. For example, do you want the assets to go outright to your beneficiaries or would you want the assets to be held in trust for their benefit? With a properly established Castle Trust, you can build in a lifetime of asset protection for your beneficiaries. So, you can protect them from a divorce, lawsuit and even protect the bloodline to ensure the money stays in the family.
#3 Reason Why You May Want a Castle Trust: Asset ProtectionThe Castle Trust builds in asset protection for you, during your life. It protects you from both lawsuits and long-term care costs. A Living trust does not offer the same benefits. By establishing a Castle Trust, you start a 5-year race, where if you can make it five years from the time you set up the Castle Trust, then everything inside the trust would be protected from the nursing home or Medicaid spend down.
This means you cold have Medicaid pay the base level of care in a Nursing home and then have a pot of resources to pay for additional services or provide for the healthy spouse. Again, a living trust does not offer this level of protection. A Castle Trust does.