| Revocable to Irrevocable?….read on:
READER QUESTION:
Thank you for all of the excellent information contained in your letters. I do have a question: If there is an existing revocable trust in good order, how difficult is it to convert to an irrevocable trust? Would I be starting from scratch or is a good part of what’s necessary for creating the new irrevocable trust available in the old trust?
MY RESPONSE:
We convert revocable trusts to irrevocable trusts all the time. It may be that when the revocable trust was created, the only goal was to avoid probate. Years later, the goal may shift to Medicaid asset protection.
To accomplish this we sometimes create a new trust or convert the revocable trust to an irrevocable trust. When we take the full conversion route, we are essentially changing every word in the trust to fit the language we want in the irrevocable trust. It really is almost like creating a new trust!
The advantage to the full conversion route is you do not have to retitle the assets from the revocable trust into the irrevocable trust because the trust already has title. This could save some money and time, especially if we can avoid preparing a new deed and recording it. On the other hand, it may be cleaner to just do a new trust and keep the old revocable trust to pass other assets you do not want to put in the irrevocable trust. There is a lot to consider.
I hope this helps! |
