Many people have preconceived notions that trusts are only for wealthy families. However, this is far from the truth; trusts can be invaluable tools in the estate plans of millions of individuals. For example, if you have minor children, you need a trust. If you want your family to avoid dealing with the hassles of probate court upon your passing, you need a trust. If you want to maintain flexibility with regard to the disposition of your assets, you need a trust. If you want to maintain privacy, you need to trust others. If you want to lower estate, income, or other potential taxes, you need a trust. If you want creditor protection, you need a trust. Remember, in a trust, you can choose to give beneficiaries certain assets at certain ages or keep the assets in trust for them for the rest of their lives.
Trusts are simply an arrangement where one party holds property on behalf of another party. Trusts are created by the person doing the estate planning (the grantor), who authorizes another person (the trustee) to manage the assets for the benefit of a third party (the beneficiaries). There are many reasons for establishing trusts, including creditor protection, tax minimization, or providing for the needs of underage beneficiaries.
A few of many valuable estate planning trusts are:
Many people leave assets for minors as part of their estate planning objectives. This can be achieved through various methods and techniques, ensuring that minor children receive the necessary creditor protection while still utilising estate planning assets for their livelihood.
Special needs trusts are tools that enable a person to leave property to an individual with special needs (i.e., individuals with disabilities). Suppose you leave your estate assets to an individual with special needs, and that individual receives government benefits resulting from his or her disability. In that case, you might unintentionally cause that individual to lose those benefits. Special needs trusts protect the individual’s eligibility by allowing them to maintain government benefits while also having access to the additional estate assets you leave for them.
Marital trusts can help with estate taxes and can give the surviving spouse creditor protection. These trusts can also be beneficial in second-marriage circumstances, whereby the grantor of the trust maintains flexibility by being able to provide for the surviving spouse while also providing for his or her children from the first marriage.
Revocable living trusts are among the most popular estate planning tools. These trusts are different from wills, although they are often supplemented by a pour-over will to ensure that the grantor’s estate planning objectives are carried out. These trusts are used primarily to avoid probate court and to help the beneficiaries of these trusts avoid having to distribute their shares to creditors. They are also effective when an individual owns property in different states.
Irrevocable trusts can be effective estate planning techniques to help minimize or avoid estate taxes by taking an individual’s assets and placing them into a trust that the individual does not own, while still allowing that person to dictate the terms of the trust.
Spendthrift trusts are used for the purpose of protecting a beneficiary against his or her creditors. There are different methods and degrees of creditor protection available for these particular trusts.
Clearly, there are many different types of trusts, each serving a particular purpose. An experienced estate planning attorney can help you accomplish your planning objectives by drafting the proper trust(s) that will benefit you and your loved ones.
