The word “trust” implies a comfortable and safe relationship with another person or entity. For estate planning purposes, however, the word “trust” can conjure up a variety of different images.

We may think of a spoiled heiress to a large fortune, whose parents were savvy enough to prevent her from having full access to her funds. On the other hand, we could imagine a loved one with special needs, whose needs will be provided for with trust-protected money.

For most people, however, the idea of using a trust instrument simply means money is protected.

The belief that a trust protects money is generally true, although it can have dangerous consequences without a greater explanation. Trusts protect money and property, but the type of trust determines what the protection is from and whom is being protected.

To understand the protections, we must first understand the individuals involved in a trust.

First, the individual creating the trust is called a grantor or settlor. This is the primary person because he or she is the individual creating and funding the trust. Taxes generally are levied against his or her property, whether that is through a simple tax structure or a more complicated estate tax.

Second, the individuals receiving the benefit of the property the trust owns are the beneficiaries. Beneficiaries are divided into two basic levels: present interest beneficiaries and future interest beneficiaries. The beneficiary can be the same person as the grantor for his or her lifetime or it may be another person or entity.

Third, the individual responsible for the property within the trust is the trustee. This person must make sure the property is properly cared for and the instructions within the trust are followed. The trustee may be the same person as the grantor with a successor in place upon the initial trustee’s incompetency or death.

The role of the grantor is one of the most significant factors in what type of asset protection can be accomplished through a Trust. If the grantor is also the trustee and the beneficiary, it is unlikely there is asset protection during his lifetime. Generally, the less control and access a grantor retains to Trust property, the safer that property remains.

Similarly, the less control and access a beneficiary retains to Trust property (that he did not himself fund), the safer that property remains for the beneficiary.

There seems to be a general misunderstanding that a revocable living trust is a simple way to protect property from nursing homes for the purposes of Medicaid. Revocable living trusts are excellent planning tools which can provide strong asset protection for future beneficiaries. However, usually the grantor is also the trustee and the Lifetime Beneficiary in a revocable trust. Even in cases in which a Grantor is not, the nature of a revocable trust allows the grantor to amend the trust to place himself in a more beneficial position. A grantor cannot accomplish asset protection through a trust in which he has the ability to control and receive the principal benefit from the Trust property.

The safest way to accomplish asset protection during the grantor’s lifetime is through an irrevocable trust. This type of Trust requires the grantor to choose someone other than himself to fill the other roles, effectively removing his own access and control. The less power that a grantor retains, the greater the asset protection.

Do not assume, however, based on these two examples, that there are only two types of trusts.

There are a myriad of trust options and each option is chosen to accomplish a specific goal of the grantor.

For example, a grantor may want lifetime asset protection for himself, but to retain the right to income from trust property and to provide a protected home for an adult child upon his death. This can be accomplished by using very specific provisions within his document.

Trusts are powerful tools and they should always be created to meet specific individual goals.

Cynthia Griffin is an elder law and estate planning attorney at Burnett and Griffin PLLC in Elizabethtown. She can be reached at

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