When it comes to securing finances and safeguarding family members, trusts are a popular option. Different types of trusts exist to accommodate various needs, and Schroon Law PLLC can help you determine which trust is best suited for your specific situation. Depending on the extent of assets and accompanying instructions, the process can be relatively brief or more extensive. Contact us today to learn more about how a trust can benefit your estate plan.

Understanding Trusts as Part of an Estate Plan

A trust is a legal arrangement that enables a property owner to transfer assets to someone else, protecting those assets and, when applicable, avoiding the probate process. The trustor, also known as the settlor or trust maker, owns the property and transfers it to the trustee. The trustee manages the property for the benefit of the beneficiary, the person or entity for whom the trust was established.

A trust can have multiple trustors, trustees, and beneficiaries. Typically, a different person or entity serves each of these unique roles. Sometimes, however, the trustor can act as both the trustor and trustee or the trustee can act as both the trustee and the beneficiary under certain circumstances.

Advantages of Incorporating Trusts into Your Estate Plan

A trust can be a valuable addition to your estate plan, providing a range of benefits such as avoidance of probate and estate taxes. When you create a trust, your assets are passed directly to your chosen beneficiaries upon your passing. This process is called “inter vivos,” meaning that it takes place between living individuals. As a result, your assets do not become part of your estate, and certain estate taxes are waived.  Also, avoiding probate can avoid the potential legal complications of dividing your estate or a contested will

One of the greatest benefits of a trust is the ability to dictate precisely how your assets are distributed after you have passed by giving you the ability to create instructions and conditions for asset distribution upon your death. For example, you can stipulate that a beneficiary must finish their education before receiving their inheritance, or that funds be distributed in staggered payments throughout the beneficiary's life. In addition, you may designate a successor trustee to manage the trust according to your terms and conditions.

There are numerous potential benefits to incorporating a trust into your estate plan, including:

• Minimizing estate taxes, particularly for those with substantial assets.
• Keeping assets private after death, as trusts are not subject to public probate records.
• Protecting assets from creditors.
• Assisting beneficiaries who may not be proficient with managing money.
• Allowing you to encourage your beneficiaries to go to college for instance via distribution of assets even after your death.

Whether you require a trust for tax purposes or to safeguard your assets, we can help ensure that your trust is customized to meet your specific requirements and cater to your intended beneficiaries.

Types of Trusts

Specific types of trusts that people can use to protect their assets or pass their property on to someone else come in many forms. However, all of these trusts are either revocable or irrevocable:

• Revocable Trusts, also known as living trusts, allow the trustor to continue to alter the property in the trust. They can even revoke the trust entirely. This gives the trustor far more control over their property. With that control, though, comes a downside: because the trustor still has access to the property in the trust they created, their creditors can often reach into the trust to satisfy debts owed to them.
• Irrevocable Trusts, on the other hand, cannot be changed or revoked once the trustor creates one. The trustor relinquishes control over the assets in the trust. Creditors cannot touch those assets once they are removed from your estate. Often, the trustor gains in terms of tax and probate avoidance.

There are many types of trusts.  Just to give you an idea of what types of trusts there are to address your specific needs, here's a list of some of the most common:  Asset protection trust; Charitable trust; Constructive trust; Special needs trust; Spendthrift trust; Tax by-pass trust; and Totten trust.  You can also create a trust specifically for your pets, farmland, or even your gun collection.

 

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    - Estate Planning Basics

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