Some people may benefit from having a trust, or multiple trusts, in addition to their will. Trusts can often be misunderstood and overlooked. You may believe trusts are only for those with significantly large estates, but that is not true. Trusts can be a great solution for many estate plans. Our team can help you to decide if a trust makes sense for your estate plans and which one would be the most beneficial.
How Does a Trust Work?
Trusts are another way to pass assets from one person to another. A trust is a fiduciary arrangement where a grantor may give a trustee permission to hold their assets on behalf of a beneficiary. The trustee is then responsible for distributing assets according to the trust. The grantor can choose who they want to act as their trustee and who is to receive certain assets through the trust.
This is different from a will, which is a document that allows you to state what assets you want to be passed to which beneficiaries. A will only goes into effect after the grantor passes away, while a trust goes into effect as soon as assets are placed in them. In some cases, trusts can be much more beneficial, as they can help you save on estate taxes, avoid probate, and give you more control over your assets.
Types of Trusts
There are various types of trusts to choose from, so which one benefits you and your beneficiaries the most will depend on your specific situation. Our team can discuss your needs and help you assess the different types of trust to help you utilize the right one.
Revocable trusts give the grantor the ability to change the trust after it’s been created. After the grantor passes away, assets in the trust will be distributed to beneficiaries. This gives the grantor a greater level of flexibility should anything change and the trust needs to be updated.
Unlike a revocable trust, an irrevocable trust cannot be changed so easily. An irrevocable trust can only be changed with permission from the beneficiaries. To create an irrevocable trust, a grantor is required to give up the legal rights to assets being placed in the trust. While this doesn’t provide the flexibility of a revocable trust, it has many benefits that a revocable trust does not.
Special Needs Trust
A special needs trust is for those who want to use part of their estate to provide for a disabled or chronically ill loved one. With a special needs trust, the beneficiary can receive their inheritance without being disqualified from government programs. This will ensure your loved one has financial resources and access to the care they need.
Assets from a trust don’t have to go to an individual. Rather, some may choose to give a portion of their estate to a charitable organization. Charitable trusts are specific types of trusts used for charitable purposes, while also providing certain tax benefits. The two main types of charitable trusts are charitable lead trusts and charitable remainder trusts.
Trusts can be a great way to preserve and manage your wealth. If you feel your estate plans may benefit from including a trust, reach out to a team you can trust. At Tressler & Associates, we’ll help you understand everything to know about trusts to ensure you make the best decision for your future.
Contact our trust attorneys today to get started.