Trusts can be valuable tools for estate planning purposes but are often misunderstood. Much confusion exists as to what kind of Trust does what. So here is a brief overview.
A Revocable Living Trust can be useful for maximizing the amount of money a husband and wife can leave estate tax free. It can also be useful for avoiding probate if properly administered. Contrary to popular opinion, however, it does not protect assets against potential nursing home costs. An Irrevocable Trust may protect assets against nursing home costs (depending on the amount of time that has passed since establishing the Trust). However, since only the income (and not the principle) is available to the Trust maker, you must be able to live on the income generated. A Testamentary Trust is a Trust established in a Will that can be useful for certain nursing home situations and also for Will bequests you might want distributed over time (instead of all at once).
Trusts can be useful for specific purposes you might have but tend to be more complicated than basic estate planning documents (Wills, Durable Power of Attorney, Health Care Proxy, Living Wills and HIPPA release) If you think a Trust might be relevant for your situation, it might be useful to talk with someone knowledgeable about them.
Roger Levine is an Estate Planning, Probate & Elder Law Attorney with offices in Canton & Brockton Massachusetts.