Hire a Trust Attorney To Protect Your Estate
Many people believe trusts are only for the wealthy, but CNN Money recommends them for anyone with a net worth of $100,000 or more. You can create a trust for virtually any purpose and the many benefits they bring to the table might surprise you. Not only can trusts benefit your heirs when you have passed on, but they can also benefit you, today. An experienced attorney can help you identify your options and determine if a trust is right for your situation.
What Is a Trust?
A trust is a legal entity that owns assets on your behalf. This trust can determine how assets are distributed while you are alive, after you have passed away or both. Trusts created while you are alive are known as living trusts. There are also trusts that only take effect after a person passes away. These are known as testamentary trusts and often work in coordination with a will.
What Are the Types of Trusts?
There are many different types of trusts and how professionals categorize them can vary from law firm to law firm. These are some of the many your trust attorney may propose.
Irrevocable Trust
Once assets move into this trust, they no longer belong to the original owner. You can also no longer make decisions without the consent of the beneficiary. For many people, this might sound like a terrifying financial situation. However, the tax benefits for you and your heirs may outweigh the risks.
Revocable Trust
In this instance, you still lose some ownership of your assets, but you maintain control of them. Because of this, you can make decisions without the consent of beneficiaries. You can also revoke the terms of the trust at any time. Privacy and avoiding probate are two of the main reasons people choose this option.
Family Trust
Also known as a credit trust or a tax by-pass trust, it allows you to pass tax-free assets to your spouse. This is ideal for couples who wish to leave money to each other without potentially paying high taxes.
Spendthrift Trust
Sometimes, the biggest threat to inheritance is not the potential taxes but the beneficiary’s financial position. This type of trust protects assets from the beneficiary’s real or hypothetical creditors. It also prevents the beneficiary from liquidating the assets.
Dynasty Trust
This allows grandparents to skip a generation or more when leaving assets to beneficiaries. In some cases, grandparents use this to disinherit children while ensuring grandchildren receive their inheritances. It also often follows a spendthrift trust.
Special Needs Trust
Special needs trusts help family members leave assets to people who rely on government benefits without disqualifying them. These trusts tend to include provisions for terminating them if law changes later make them a threat to the beneficiaries.
Charitable Trust
If there is a specific cause you espouse or you want to support a particular organization, this type of trust makes it possible. This type of trust can also reduce or eliminate the gift tax and can play an essential role in tax planning strategies for high-asset families.
Pet Trust
To some people, the idea of setting up a trust for a pet might seem ridiculous. To others, providing for the family pet is an indispensable part of the estate plan. This is especially common among people who have no children, who own exotic animals or who care for pet actors and show dogs.
Constructive Trust
Also known as an implied trust, a court order may establish this based on specific circumstances and facts. In such cases, the court may argue that even though the deceased never set up a formal trust, he or she intended to do so or had specific intentions for assets that the trust can provide for.
How Does Someone Set Up a Trust?
The specific process for setting up a trust depends on the applicable state and federal laws that govern the situation the trust aims to address. The steps also vary based on the type of trust you want to set up. With this in mind, here are general steps to follow.
1. Identify the Problems
What are some of the problems you want to reduce or eliminate with your estate plan? These can range from concerns about debtors making claims against the family farm to addressing the future tuition needs of your grandchildren.
2. Determine Wishes
After reviewing the potential problems, consider the outcomes you prefer. Various types of trusts may not provide every perk you have in mind, so consider ranking them in terms of importance. If you had no obvious problems to tackle, spend more time on detailing your wishes for how to distribute your assets.
3. Assess Potential Trusts
An experienced trust attorney can help you review all the potential trust options available to you based on your concerns and desires. A good trust attorney will look at your entire estate plan to see how best a trust fits into your plans and whether you need to make additional adjustments.
4.Create the Trust
CNN estimates that a basic trust can cost anywhere from $1,600 to $3,000. This cost estimate includes the accompanying will, living will and healthcare proxy. The more assets you have to protect by a trust, the more cost-effective it is. Note that complex trusts may cost more.
Do You Need To Work With an Experienced Local Attorney?
There are many free or inexpensive services online that promise to create trusts for you and your loved ones. Over the past few years, people have used these with mixed results. One of the biggest complaints is that they are not usually customizable. Because of this, if you have unique or specific problems you need to address, these trusts may not address those. Some have also failed to stand up in court.
Hiring a professional increases your chances of making good, informed decisions. An experienced attorney can also help you avoid pitfalls you might not otherwise know to look out for. If you believe working with an experienced trust attorney is the right approach for you, we can connect you with one. Submit a request online or call us today at (866) 345-6784 to get in touch with an attorney in your area!
