When developing your estate plan, there are a number of trusts that you may choose from. This can easily become overwhelming, requiring the guidance of an experienced estate planning lawyer. Trusts have the ability to offer a number of benefits to not only you, but your beneficiaries. While many largely attribute the use of trusts to exorbitant wealth, this is not necessarily the case. A trust can give you the opportunity to:
- Protect your assets from creditors
- Reduce estate taxes
- Allow you to control how your wealth is distributed to heirs
- Avoid the public process of probate
It’s important that you seek the advice of an estate planning lawyer when engaging in the estate planning process. They will be able to review your specific needs to determine whether it is in your best interest to consider a trust. Most trusts fall under one of two types:
Revocable Living Trusts: This type of trusts allows you to retain control during your lifetime. At any point you will have the ability to make changes or dissolve the trust completely. Because people’s lives are constantly influx, this may be a viable option as it allows you to update the trust as life changes occur. A revocable trust gives you the ability to name yourself as trustee while you are still living. The trust will also identify a successor trustee who will take over managing the trust after you have passed away.
Irrevocable Trusts: Irrevocable trusts offer less flexibility because once they have been created, they cannot be changed. Irrevocable trusts are beneficial in that they can protect your assets from a number of situations. Not only can they reduce taxes, they can protect assets from creditors and beneficiaries.
There are a number of trusts that you may choose from based on your specific situation. The following includes brief descriptions of available trusts:
Marital Trust: Allows you to pass assets within the trust directly to your spouse while avoiding estate taxes.
Testamentary Trust: This becomes an irrevocable trust once you pass away and allows you to protect the assets you intend for your beneficiaries. This may include: your spouse, children from a previous marriage, and children with special needs.
Special Needs Trust: This type of trust allows you to ensure that your loved one with special needs is taken care of while still giving the ability to access government benefits. This can be provided to: children, parents and siblings.
Irrevocable Life Insurance Trust: Holds proceeds from life insurance policies. Upon your death, proceeds from a life insurance policy enter into the trust, with an appointed trustee to oversee and manage the trust for beneficiaries.
Generation Skipping Trust: Allows you to pass assets directly to grandchildren while avoiding estate taxes.
Spendthrift Trust: Help to protect beneficiaries who may not be financially responsible. This can help to prevent beneficiaries from misusing the trust. Some include instructions that allow the beneficiary to spend any interest the trust incurs while ensuring that the principle is left untouched.
Considering whether a trust is right for you and your family? Whether you already have an estate plan in place or are just getting started with the process, it’s important to turn to an estate planning lawyer that you can trust. They will be able to provide you with the proper guidance and support you deserve, while weighing all of your options. This can be beneficial in giving you the ability to protect your legacy, provide you with control and ensure that your assets are dispersed according to your wishes.
Contact an estate planning lawyer for more information.