TRUSTS – A Vital Estate Planning Tool with Various Options to Fit Your Needs
Trusts can be an essential tool to help you plan for inheritance provisions under various circumstances. The core types of trusts that we use include revocable living trusts, life insurance trusts, special needs trusts, and irrevocable trusts.
Browse the information below for an introduction to each of the types of trusts we use for estate planning. For additional detail, including legal guidance on which type of trust is best suited to your goals, contact our office for a consultation.
REVOCABLE LIVING TRUSTS
For those who wish to establish a trust that can later be revoked, our estate planning firm can help. A revocable living trust can be taken away from the trustee based on certain conditions set by the grantor in the terms of your trust.
Living trusts are complex legal tools that have various advantages and disadvantages which our firm can cover to help you make the best decision for you and your estate. For example, many clients come to us with the mistaken belief that living trusts can save on estate, inheritance, or income taxes, which they cannot.
Call our office today to discuss which type of trust will best suit your estate planning goals.
LIFE INSURANCE TRUSTS
Life insurance trusts are an effective strategy for protecting insurance payouts from the taxable estates. Unfortunately, there are many people who are unaware that payouts from insurance after the death of the insured can be and often are subject to estate tax. Establishing a life insurance trust even for smaller policies can help mitigate negative tax consequences and undue burden for surviving loves ones.
Common considerations to think about when establishing this type of trust is determining whether the direct payout of benefits to a beneficiary, such as a spouse or child, is in line with the wishes of the insured. Minors, for instance, may require guidance financially to handle large sums of money paid out via a trust. In these instances, additional provisions can be made in the trust to manage distribution for your loved one.
It is important to note that, with life insurance trusts, ideally the trust itself will purchase the policy so it is best for the trust to be established before the insurance policy.
SPECIAL NEEDS TRUSTS
Parents caring for a special needs child can plan for the future of that special needs child through the establishment of a special needs trust. With a special needs trust, proper financial planning and care plans can be established to ensure the long-term well-being of your special needs loved one after your passing or in the event you are physically or mentally unable to provide care. We advise all parents and primary caregivers of special needs individuals to begin the process of creating a special needs trust as early as possible as a critical safeguard for your loved one's present and future.
The advantage of an irrevocable trust for estate assets is that it effectively removes the trust's assets from the grantor's taxable estate. With an irrevocable trust, no termination or modification can be made without permission from the beneficiary. The grantor forfeits all of rights of ownership to the assets transferred to the trust.
For more information on trusts, call our office today to discuss the estate planning tools that will work best for your assets and wishes.