For high-net-worth individuals, protecting wealth continues to be of paramount importance. A revocable living trust may seem a handy instrument to manage assets throughout your lifetime and distribute them after death. It gives you a feeling of control and flexibility in the trust to adjust to your changing circumstances.
The problem, however, is that a revocable living trust can be quite disadvantageous to people with substantial wealth. In fact, it can potentially leave your assets exposed, resulting in serious threat to what’s yours.
We at Dominion understand the unique challenges faced by HNWIs and UHNWIs (high-net-worth individuals and ultra-high-net-worth individuals). We’ve seen the limitations of revocable trusts as far as true asset protection goes.
And we have discovered that often these trusts give people the false sense of security that they are protected from legal complaints or creditors, but we are finding instead that isn’t the case at all.
A revocable trust might be good enough for basic estate planning, but it doesn’t protect your wealth from the intricacies of night net worth legal needs. So we’re going to explore the unique dangers of revocable living trusts, explaining that they may not be the definitive way to protect your legacy.
Revocable Living Trust Disadvantages
As someone who has amassed great wealth, you’ve got a lot to think about. You don’t share the same needs and concerns as everyone else due to how much wealth you have. And that means you need to explore as many options as possible to ensure you’re making the right call to protect your money.
One of those options is a revocable trust. Unfortunately, it might not be the best solution for your needs. Here, we specifically examine the ways in which high-net-worth individuals may unwittingly suffer from some of the drawbacks of revocable living trusts.
Limited Asset Protection
The single most significant shortcoming of a revocable living trust is that it cannot truly protect your assets. It gives the appearance that you’re separated somehow from your wealth, but it doesn’t provide the full immunity that so many believe it does. In fact, creditors and lawsuits will still be able to get to your assets, and that’s a big problem.
Your control of the trust is the fundamental issue here. Since you can end the trust or change its terms at any time, a judge can command you to take the assets from it to pay a court-ordered judgment. This defeats the whole purpose of asset protection, making your wealth available to be hit by unforeseen circumstances.
No Tax Advantages
Unlike irrevocable trusts, revocable living trusts do not generate any type of tax benefits. The money isn’t yours forever, either – when you pass, it is part of your taxable estate and will be subject to estate tax. Nor is there a reduction in income tax liabilities. This lack of tax optimization can be a big disadvantage for HNWIs.
Vulnerable in Divorce
If you are thinking of using a revocable trust as a shield against divorce, think again. The assets that you have held in a revocable trust could be seen as marital property.
That means assets in a revocable trust may be subject to division in divorce proceedings. A prenuptial agreement may provide some protection, but it’s nowhere near as secure as the protections of an irrevocable trust.
Cost and Scope Might Overshadow Benefits
The scope and the costs of putting a revocable living trust in place (or even maintaining one) should not be taken lightly. All the legal fees, paperwork, and ongoing administration can cost a lot, fast.
For some people, these costs may exceed the benefits perceived to be generated from the trust, especially where the trust’s asset protection capability is limited.
Medicaid Exemption Is Lacking
Another big drawback is that it lacks Medicaid exemption. If you have to qualify Medicaid to cover long-term care costs, assets in your revocable trust will be counted toward your eligibility.
That can result in a hindrance to your ability to get help when you need it the most. Thankfully, there’s another option. Irrevocable trusts can be the better choice for people trying to plan with Medicaid.
A revocable living trust can put you in a false sense of security. It may seem like a convenient way to manage your assets, but HNWIs require complete protection, and this certainly does not provide such.
Let Dominion help you make the right call for protecting your wealth. We’re serious about making sure our clientele’s assets have the best protection possible.
To do that, we are transparent in all that we do – not only so that we can provide transparency to our clients but also to empower them to have the knowledge to make informed decisions.
Dominion is always going to be open and honest about asset protection, and that applies to revocable trusts and where they fall short. We want you to have the best, most complete understanding of protecting your money before deciding anything that will affect your financial future.
Irrevocable Trusts Are a Great Fit for HNWIs. Here’s Why
Now that we’ve exposed where revocable trusts falter, let’s take a look at a better, more secure solution for high-net-worth individuals – the irrevocable trust.
You Get True Asset Protection
The major disadvantage of revocable trusts is that they do not afford the grantor the same level of asset protection that irrevocable trusts provide. If you put your assets into an irrevocable trust, you cannot reclaim them in any way, shape, or form.
This may appear to be a surrender of power, but this is the precise reason why your wealth is almost impervious to being confiscated in court.
With an irrevocable trust you are putting a wall between your assets and possible risks. Creditors and lawsuits will also have a hard time trying to get through this layer. This is because the assets are owned by the trust and not you. Plus, you won’t be tempted or requested to get into money that doesn’t belong to you.
Dominion’s Expertise in Asset Protection
As a wealthy individual, you’ve got a lot to consider. Perhaps the most important is how you’ll keep safe all the wealth that you’ve accumulated. That starts with having a seasoned expert in your corner; a conventional financial advisor simply won’t do.
On the contrary, you need a team that understands the dynamics of protecting the assets of high-net-worth people. At Dominion, we don’t just offer asset protection services; it’s what we specialize in.
Our insights into legal tactics and jurisdictional possibilities allow us to work in the sphere of wealth protection highly effectively. We have some of the best international lawyers and asset protection specialists on our team – people who eat and sleep global wealth protection.
Superior Wealth Protection from the Experts You Trust
While many companies advertise themselves as providing similar services, we have a superior understanding of the major markets and all the important asset protection jurisdictions.
Our attorneys are legal experts who are also residents of these countries. Why is that important? Because it means they’re familiar with these countries’ legal frameworks and even know the lawmakers personally. This “in” ensures that you’re getting accurate, up-to-date insight for reliable asset protection.
We have a level of understanding that makes it possible for us to design a general asset protection plan that suits your situation. It’s not our policy to provide standard solutions. We consider your individual case, we get to know your concerns, and we create a strategy that meets your objectives, both long- and short-term.
Whether you want to create an irrevocable trust, incorporate offshore structures, or use other legal instruments, we know how to create a shield for your wealth that you can count on. And since we don’t follow any specific legal system, we can offer you a ton of different ways to secure what’s rightfully yours.
As your advisors at Dominion, we walk beside you to ensure your legacy is well protected. Your money is the fruit of your labor, your efforts, and your dreams. It is our mission to make sure that your vision remains protected for years to come.
Let Dominion Help You Make the Right Call to Protect Your Assets
We’ve seen where revocable trusts fall short, and for HNWIs and UHNWIs, even the slightest shortcoming is too much. But if you don’t have a firm grasp on the intricacies of asset protection, it’s easy to make the wrong call. That’s why our expertise in this arena is invaluable.
And make no mistake, we’re not bragging – we’re just being honest. At Dominion, we are leagues ahead of the competition. Our financial experts are supremely qualified, knowledgeable, and experienced in all things asset protection. And you can trust us to work to keep your wealth secured like it’s our own.
That’s the Dominion difference. So if this is the kind of expertise you want safeguarding the legacy you’ve built up over the years, let’s talk. Arrange a consultation so we can steer you toward the best strategy for your wealth, whether it’s an irrevocable trust or otherwise.
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