Estate Planning with Trusts


Estate Planning with Trusts

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 to maintain flexibility with regard to the disposition of your assets, you need a trust. If you want to maintain privacy, you need a trust. If you want to lower estate, income, or other potential taxes, you need a trust. If you want to have 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 useful estate planning trusts are:

Trusts for Minor Children

Many people leave assets for minors as part of their estate planning objectives. This can be done in a variety of ways and techniques to ensure that minor children get the creditor protection they need, while being able to utilize estate planning assets for their livelihood.

Special Needs Trusts

Special needs trusts are tools that enable a person to leave property to an individual with special needs (i.e. individuals with disabilities). If you leave your estate assets to an individual with special needs and that individual receives government benefits resulting from his/her disability, you might unintentionally cause that individual to lose his/her government benefits. Special needs trusts protect those individuals’ government benefits by allowing them to maintain those benefits while allowing them to have access to the additional estate assets you left for them.

Marital Trusts

Martial 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 yet also providing for his/her children from the first marriage.

Revocable Living Trusts

Revocable living trusts are among the most popular estate planning tools. These trusts are different from wills although they are often supplemented by pour-over will in order 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 distributing their shares of the trusts to their creditors. These trusts are also effective when an individual owns property in different states.

Irrevocable Trusts

Irrevocable trusts can be effective estate planning techniques to help minimize or avoid estate taxes by taking an individuals assets and placing them into a trust that he/she does not own but allowing that person to dictate the terms of the trust.

Spendthrift Trusts

Spendthrift trusts are used for the purpose of protecting a beneficiary against his/her creditors. There are different methods and degrees of creditor protection for these particular trusts.
As far as one can see, 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 helping you draft the proper trust(s) that will benefit you and your loved ones.

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