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The Real Reason You Need a Revocable Living Trust

By Jamie Long
The Passionate Patient Advocate
GolderCare Solutions, Unlimited, LLC

I’m not a lawyer. I don’t even play one on TV! Once upon a time I was, but that was a prior life.  I was, in fact, the first elder law attorney in this region of the country. I retired from that and gave up my law license about 3 years ago.

These days, I am a private patient advocate with GolderCare. As part of that, I spend a lot of time helping people transition from independent living to long-term care.  In my role as a private patient advocate, I regularly find myself forced to actually deal with the issues I used to preach about as an elder law attorney.

One of those issues is how to access the financial resources of people in long-term care, or otherwise homebound.  Sometimes we’re just looking for information about those resources, like when we apply for public benefits to help pay for care.  For instance, Joe is in long-term care.  How do we pay for it?  How do we access Joe’s income and assets in order to pay privately for his care?  How do we access his bank records in order to successfully apply for Medicaid?

In today’s world, banks and other financial houses blatantly and regularly refuse to honor Durable Powers of Attorney (“DPOA”s) which should allow the needed access.  Sometimes they even demand that the account holder appear in person despite being homebound and unable to do so.  In cases where the financial institution persists in such unlawful behavior, there may be no choice but to take them to court or to initiate a conservatorship of the homebound person’s estate.  This is often referred to as “Living Probate,” in other words, conservatorship or guardianship proceedings in the Probate Court while Joe is still living as distinguished from decedent’s estate proceedings in the Probate Court after Joe’s death (also known as “Death Probate”).

As problematic and undesirable as Death Probate can be, Living Probate is almost always far worse. It strips you of almost all control of your finances and, often, your personal and other life decisions, as well. And it usually eliminates most of the strategies used to preserve and utilize your financial resources to your best advantage as you age.

So, it’s almost always best to avoid Living Probate. But if a DPOA won’t do it, what can?  The answer: a Revocable Living Trust (an “RLT”).

Next question:  What’s so special about an RLT?  How is it that an RLT can get the job done when a DPOA can’t? The answer:  an RLT is a stronger and more powerful tool than a DPOA.

In a DPOA, the Principal (that is, you) gives the Attorney-in-fact (that is, your agent) the power to transact business on your behalf. That’s all.

In an RLT, on the other hand, the Creator, or “Settlor,” of the trust (that is, you) gives the Co-Trustee or the Successor Trustee (that is, the person helping you with your financial affairs) not only the power to transact your business but also the title to your assets, as well. (Technically, your co-trustee or successor trustee owns, or co-owns, the assets in your trust for your benefit.) Thus, your co-trustee or successor trustee has title and, therefore, an ownership interest in your assets, in addition to the power to transact your business affairs.

Because the person helping you has an ownership interest in your assets, in addition to the power to transact your financial affairs, the banks and other financial houses are in no position to deny them access to the assets or to information about the assets. They can’t ignore or countermand an owner.

Voila!  Problem solved.

Standard estate planning wisdom says that the primary purpose of an RLT is to avoid Death Probate.  Unfortunately, standard estate planning wisdom is dead wrong (pun fully intended). Elder law attorneys realize that the real primary purpose of an RLT is to avoid Living Probate. Too often, Living Probate equals Living Hell. That’s the real reason you need a Revocable Living Trust.

Bottom line: Why put yourself and your loved ones through Living Hell?  Avoid Living Probate. Use the most powerful tool available to do it:  an RLT.

So, when should you put your RLT in place? The answer:  Now! Make sure you’re ready for when the time comes.  Remember:  it always seems too early until it’s too late. And it always seems too much until it’s too little.

Jamie Long is the Founder and Chief Patient Advocate for GolderCare Solutions and can be contacted at 309-764-2273.