Klenk Law

Can a Revocable Trust Protect Your Assets from Catastrophic Medical Bills?

Posted on Mon Jul 29, 2019, on Uncategorized

 

Catastrophic medical costs are a real worry that many Americans have. If you or your spouse becomes ill, you may be looking at thousands, if not hundreds of thousands of dollars’ worth of medical bills. If you cannot pay your bills, then collection agencies may start hounding you for payments. Hospitals may even take you to court and take legal action to receive the money that you owe them. When you do not want to give all of your wealth to a hospital or when you have money put away in a trust, you want to know that you are protecting it. If you have a living trust, can you protect it from creditors?

What Is a Revocable Living Trust?

Often, people choose to have a living trust when you are planning your estate or writing your will. The purpose of a living will is to save your family from having to deal with probate when you die. When you have your assets in a living trust, you do not need probate court approval to pass on the inheritances. Living trusts also allow another person to step in if you are incapacitated to take care of your assets.

Can Creditors Touch Revocable Living Trusts?

Living trusts do not protect your assets from creditors. If someone has a claim against you, they can still access these assets. If you have catastrophic medical bills and the hospital files a claim to receive payment, then may still be in trouble. You are considered the owner of the trust assets. You are able to put property in your trust, sell it, take it out and give it away any time that you want. Since you have no restrictions, you cannot protect your assets from creditors.

Can You Protect Assets in a Trust?

Now, if you do want to protect your assets, you could always put your money in an irrevocable trust. Irrevocable trusts do not allow you to control the assets that you put in. Once in the trust, you are not the owner of it. This means that if a hospital files a lawsuit, you do not have to worry about them taking your assets.

When it comes to catastrophic medical bills, it’s important that you can save your assets from creditors. Most people do not have the money available to pay such extreme medical bills. If you’re worried about creditors getting a hold of your assets, then consult with a trust administration lawyer in Schaumburg, IL today about your options.

 

Thanks to Bott & Associates, Ltd. for their insight into estate planning and revocable trusts.

 

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