ESTATE LAW
TRUSTS & ESTATE LAW
Building Your Legacy: A Guide to Trusts and Estates
ASSET PROTECTION: A GUIDE TO TRUSTS
Trusts are a key part of estate planning and asset protection that help to ensure your assets are distributed to the right beneficiaries. It is a legal arrangement in which assets are managed by a trustee on behalf of the creator and designated beneficiaries. Trusts can offer significant tax advantages, save time by avoiding costly probate and simplify the estate settlement process. While they may involve setup and maintenance costs, trusts can be customized in many ways—such as living trusts (revocable trusts), which allow the creator to change beneficiaries or assets during their lifetime or irrevocable trusts which remain after the creator passes.
TYPES OF TRUSTS?
A trust can be tailored to your needs. There are many types of trusts and some of the more common ones include:
Living trust
Also also known as revocable trusts. With these trusts, you can change the beneficiaries and assets while you’re alive and physically and mentally able to do so. You can even name yourself as nthe trustee and a name a co-trustee or successor trustee.
Irrevocable trust
You can’t change your mind. Once you put assets in the trust and name a beneficiary, it’s permanent. Since the assets in an irrevocable trust technically aren’t yours – the trust owns them – you can potentially reduce your estate taxes.
Special needs trust
A trust that allows a physically or mentally disabled or chronically ill person to receive income without reducing their eligibility for the public assistance disability benefits.
Spendthrift trust
When beneficiaries can’t make sound financial decisions for themselves, the trustee decides how the beneficiary is allowed to use the money.
Charitable trust:
An irrevocable trust from which assets go to one or more charities.
Education trust
Beneficiaries can only use the money for educational expenses.
WHAT IS A TRUST?
A trust is a legal arrangement intended to ensure a person’s assets eventually go to specific beneficiaries. The person creating the trust puts assets in the name of the trust and authorizes a third party to administer those assets for the trust creator and the beneficiaries.
BENEFITS OF TRUSTS
A trust ensures your assets go to the correct beneficiaries. Setting up a trust correctly offers tax benefits for those subject to estate taxes in order to maximize wealth for future generations. A well designed trust can help save time, avoid probate court and costs, and minimize paperwork and other headaches when settling an estate.
HOW DOES A TRUST WORK?
It might help to think of a trust as an objective, reliable third party who watches your money when you can’t. Trusts are managed by a trustee – a trusted person or organization that oversees the assets and property in the trust. (The trustee is sometimes paid annually for this work, which is one of the reasons complex trusts can be expensive to set up and maintain.)
WHO NEEDS A TRUST?
Trusts are not just for ultra-high net worth individuals. People use them to move assets through the generations while maintaining tax favorable status or even manage their own assets during their life. They can help ensure you are cared for during your lifetime if you become mentally or physically incapacitated. Trusts can also help keep your estate stay out of probate, an expensive and time consuming process.
IS A TRUST RIGHT FOR YOU?
Consult with Russell Marne at Marne Law Estate Planning to see if trusts are suitable for you.
GLOSSARY
- Beneficiary : A beneficiary is a person or entity legally designated to receive the benefits from your insurance and financial products.
- Estate Planning : Estate planning is a process that determines how your money and other property should be managed during your life and after your death. Wills and life insurance are components of the process.
- Grantor: The person who created the trust.
- Irrevocable Trust : Any trust where the grantor cannot change or end the trust after its creation. Grantors may choose a trust with such limitations to limit estate taxes or to shield assets from creditors.
- Revocable Trust : A trust that can be changed or revoked by the grantor after it is set up. That means the grantor retains control of the assets. In a revocable trust, any income generated is taxable to the grantor, who pays taxes on distributions and any capital gains.
- Trustee : The organization or person who administers the trust.
The Trust Planning Basics covered by this webpage are intended to educate and inform but not substitute for legal advice. Please call or email for a free consultation, at our offices in San Rafael or conveniently in the comfort of your own home.
Under certain circumstances Marne Law provides free legal assistance to financially eligible clients and survivors wanting to document their estate planning wishes with the aid of a qualified attorney.
For further information please contact Russell Marne, Esq.