What Is a Trust & How Can It Help You?
A trust is a more versatile tool for skilled estate planning attorneys. A legal trust has a distinct feature from other legal instruments in an estate planning lawyer’s toolbox. It is a separate legal entity from that of the person creating it, which can own property separately from yourself. All property owned by a trust must be cared for by yourself or a third party as the trustee, however, legal title is held by the trust. This gives our Harrisburg estate planning attorneys the ability to help save you money on taxes, direct how beneficiaries of the trust are to receive the monies or property, and create conditions to which distributions of property from the trust can be made.
Types of Trusts
There are several different kinds of trusts, including:
- Testamentary trusts are created in a will after someone dies and provides for the distribution of all or part of an estate. Testamentary trusts can protect your assets and reduce the taxes paid by the beneficiaries from income earned as a result of the inheritance.
- Irrevocable trusts cannot be changed or terminated without the permission of the beneficiary. The assets in an irrevocable trust no longer belong to the grantor (the person who created the trust); rather, they become the legal property of the trustee to hold for the beneficiaries, which reduces the value of the person creating the trust’s estate for estate tax purposes.
- Revocable living trusts are made during your lifetime and can be changed as your circumstances or wishes change. Assets in these types of trusts are for your benefit during your lifetime, then transferred to your designated beneficiaries upon your death by your chosen representative. Often these are disfavored tools of many estate planning attorneys, but can still be used if suits your financial goals best.
- Special needs trusts are created for loved ones who have special needs and are receiving government benefits can actually cause them to lose their benefits if they simply name them as beneficiaries on their estates. By putting assets in a special needs trust, funds can be distributed in such a way so as not to affect government benefits eligibility.
- Charitable trusts are for those who wish to give their assets away to a specific charity, or set up a charity of their own, can place the funds into this type of trust. The trust can be funded during one's lifetime or upon one's death.
What Are the Advantages of Establishing a Trust?
Some of the advantages of establishing a trust include:
- Allowing the person creating the trust, called a settlor, to receive clear instructions on how and when your assets and funds are to be distributed after you die;
- Reduce estate and gift taxes;
- Distribute assets to your heirs efficiently without the cost and delay of probate court;
- Better protect your assets from creditors and lawsuits; and
- Place conditions on how monies/assets are to be used, such as "funds are only to be used for educational purposes."
When it comes to creating a trust, there are many complicated factors that must be considered. Let our team at The Law Office of Jason R. Carpenter help you identify your assets, goals, and wishes to create a detailed trust that is most beneficial to your situation.