The Types of Trusts You Need to Know About
Estate planning is an important tool for accomplishing different goals. From the adequate transfer of generational wealth, to setting up your estate to legally circumvent the time and expense associated with administering an estate through probate procedures, you can accomplish a lot through a properly crafted estate plan. When people think of their estate plans, they most likely think about having a last will and testament drafted on their behalf. While a last will and testament may accomplish the goal of ensuring that your property is transferred to whomever you please upon your death, a last will and testament does not possess the same powers that a trust has. For instance, through the use of a trust, you can avoid probate, control the passage of assets for generations to come, and even direct the care of your pets. A trust-based estate plan is an exceptional option for caring for your estate and is most certainly something you should discuss with your estate planning attorney. This article will discuss the different kinds of trusts you can consider adding to your estate plan.
Revocable Living Trusts
A revocable living trust is a type of trust that allows you to have a lot of flexibility with the assets that you put in that revocable living trust. In order to have a valid trust of any kind, you must have a grantor (the creator of the trust), a beneficiary (the person who will benefit from the trust’s terms), a trustee (the person who is in charge of administering the trust according to its terms), and the trust must be funded (meaning it must have property or money titled in the name of the trust). Once those requirements are met, you generally have what you need to have a valid trust.
Special Needs Trusts
A special needs trust is a trust that allows you to transfer property to the trust for the benefit of someone with special needs. Generally speaking, those with special needs are subject to income and asset restrictions to continue to receive certain government benefits. Through the use of a special needs trust, you can effectively, and legally, shield assets from counting against your loved one with special needs so that you can provide for them while not disturbing their flow of benefits. Please note that these trusts may be either revocable or irrevocable, depending on who the parties of the trust are. It is important to sit down with your estate planning attorney to discuss your needs regarding a special needs trust and how to prepare the best one for your needs.
A testamentary trust is a trust which is built into the terms of a last will and testament. Some people wish to use such trusts to plan for inheritances of minor children or to ensure that they can keep a firm hold on the use of assets after death. Please note, however, that testamentary trusts come with their own set of challenges. For instance, one of the main goals of having a trust is for avoidance of probate. Not only can probate be costly and time consuming for your surviving loved ones, but probate is also a public process. Essentially, when your estate goes through probate, an inventory and accounting of your assets are made part of the public record. If you are using a testamentary trust, be warned that the trust will have to be administered within a probate proceeding, thus defeating one of the biggest perks of using a trust in the first place.
Many people love their pets as if their pets were their own children. With that in mind, it is only natural to have your pets in mind when it comes to creating your estate plan. When it comes to estate planning surrounding your pets, you must keep in mind where you would like your pets to go when you pass away and you may even want to ensure there is money set aside for their care after you are gone. That is where pet trusts come in! Through a pet trust, you can have money set aside for the care of your pets after your death. In these instances, it would be a good idea to name someone you trust as the trustee and may even be an even better idea to ensure that this trustee will have money set aside as compensation for caring for your pets. Regardless, your estate planning attorney will be equipped to craft the best pet trust for your needs.
Trust planning can be daunting, but with an experienced estate planning attorney by your side, you can be confident that you will have the proper guidance you need to make sure that your goals are accomplished. Please keep in mind that these are not the only options you have in terms of trust-based estate plans. Furthermore, your estate planning attorney may not even recommend a trust for your situation. Regardless of your goals, it would be beneficial to meet with an estate planning attorney to map out just what sort of plan is best suited for you. If you have any questions or need assistance setting up your estate plan, we encourage you to give Stivers Law a call at 305-456-3255.