As of March 27, 2013, you will now be able to create an Irrevocable Legacy Trust. This device allows you to create a Trust, with your assets and for your benefit, which is protected from your creditors. Prior to 2013, if you created a Trust for your benefit (meaning you could still use the money or property) your
creditors could reach the Trust assets.
The Legacy Trust allows you to insulate a portion of your assets from creditors.
This is important for professionals who have a large amount of potential liability (or wish to protect assets from a future Medicaid spend down).
If you put assets into a Legacy Trust, there are limitations on the use of those assets. For liquid, financial assets you can only use:
(a) Current income from the Trust assets and
(b) Up to 5% of the principal (on an annual basis)
The Trust assets can be used to pay the income tax attributable to the assets. In
addition, the Trust can be used to pay debts, expenses, or taxes of your Estate
after your life.
At all times, an Ohio Legacy Trust must be managed by a third party (you cannot be
the Trustee). Even though you cannot be the Trustee you can replace the Trustee
at any time (and appoint a new third party).