Trusts are desirable estate planning methods because they put you in control of your assets after you die. Trusts enable you to put conditions on when and how your assets will be distributed, and trusts will also reduce gift and estate taxes. Another advantage of trusts is the efficient distribution of your assets without going through the probate court.
Trusts can be flexible, varied and complex. Several types of trusts are available, and each type has advantages and disadvantages. Our firm’s estate planning expertise can thoroughly discuss each type that would serve your wishes and protect your assets while you are alive. A trust provides for a trustee who will manage your trust after you die to ensure that your wishes are carried out and that the assets are properly managed and protected.
One useful trust is a revocable trust, also known as a living trust, which means that assets held in the trust will remain accessible to you while you are alive, but you can still designate the beneficiaries of your assets. This trust is effective even when there are complex situations like children from more than one marriage. Although a revocable trust may help avoid probate, it may still be subject to estate taxes. This trust does not protect your assets from litigation.
An irrevocable trust protects your assets from estate taxes and probate, but the trust provisions cannot be altered once it is executed. You cannot change the terms of the trust and you cannot dissolve it. You will lose control over the assets held in the trust. This type of trust may protect your assets from litigation, and you will not have any tax liability on income that the assets of the trust generate.
The primary distinction between the many types of trusts is whether they are irrevocable or revocable. Some types of trusts are briefly discussed here, but the expertise of an estate planning attorney is the best source for a complete understanding of every trust and to determine which trust is right for your situation.
A Marital Trust is structured to ensure that benefits are provided to your spouse. These benefits may be included in the taxable estate of your spouse.
A Testamentary Trust is provided in a will, and it is created through the will after your death. The assets are subject to probate and transfer taxes. This Trust often is subject to continuing probate court supervision.
An Irrevocable Life Insurance Trust is designed to exclude life insurance proceed from your taxable estate without eliminating the liquidity of your estate and trusts for the trusts’ beneficiaries.
Every trust has a purpose in the estate planning process, but not every trust is right for every situation. We can help you understand each trust that might be applicable for your situation.