Basic and Advanced Family Planning.
What Is a Trust?
Trusts provide a fiduciary structure which appoints a trustee to maintain the assets for a designated beneficiary or beneficiaries. Beneficiaries can benefit from quicker access to the assets via trusts instead of a will, since probate is usually bypassed.
Additionally, irrevocable trusts may be exempt from taxation when the trust-maker dies, thus potentially reducing the amount of estate taxes due.
Trusts also help expedite the transfer of assets, bypassing the lengthy probate process while simultaneously minimizing the estate tax liability.
Protecting Your Assets & Your Family
A trust can be thought of as a safe where valuable assets are placed for protection from probate proceedings. However, assets that are not placed within the trust are not protected from probate proceedings. The trust is also your rule book, allowing you to set detailed instructions for your trustee to follow after your death.
Basic Family Planning
Every family can benefit from basic trust planning. These revocable trust programs will enable families to be protected from probate, remaining debts from the trustee, protect spouses of foreign origin, and more. Having a basic plan in place is a baseline requirement for more advanced planning, as well.
There are many types of revokable trusts and Springdale Law Group will help fit the one that best fits your situation.
Common Basic Trusts
During life, a living trust is established and funded. This trust can be terminated by the grantor during their lifetime, making it a revocable trust, and the assets are not subject to the probate procedure. This type of trust is frequently used due to the possessions not needing to go through probate. With the ability to alter the trustee, the beneficiary, or even dissolve the trust altogether, the grantor has a certain degree of control. When the grantor passes away, the trustee distributes the assets in line with the trust’s terms rather than with the grantor’s will or probate court.
A testamentary trust is set up according to the terms outlined in a grantor’s will. It is only established upon the grantor’s death, and all the assets it encompasses must go through the probate process. The conditions of the trust can be altered until the time of death, by altering the will accordingly. Additionally, a testamentary trust can be contingent, meaning it will be enacted only when certain criteria, such as the age of its beneficiaries, are met.
Just as you would plan for your children and partner’s future, you can set up a trust for your pets. These trusts may take many forms: Long and Short Term Care Planning triggering upon emergency, Traditional Trusts (Living or Testamentary), and Statutory Trusts determining care for animals for their lifetime in your absence.
Advanced Family Planning
For families with significant assets and wealth, advanced planning may be required to ensure beneficiaries of an estate are not subject to extremely costly probate and estate tax balances.
Springdale Law specializes in custom advanced family planning for qualified clients and can provide creative solutions for your family and estate.
Lifetime Asset Protection Trust (LAPT)
For heirs with significant debt, an LAPT protects the beneficiaries of your inheritance from creditors. A designated trustee will control the remaining assets protecting your children and having final control of the distribution of assets.
Qualified Domestic Trusts (QDOT)
Spouses who are not citizens of the United States are subject to steep estate taxes unless they are protected under a QDOT. If you are married to someone who is not a United States citizen, it is wise to use a QDOT to ensure a safety net in the event of a life ending event.
Qualified Terminable Interest Property Trust (QTIP Trust)
QTIP Trusts enable a trust grantor to continue growth of the estate after a life-ending event. This protection enables distribution to your remaining beneficiary to ensure their finances and quality of life continue to be supplemented by your estate for the rest of their lives. QTIP Trusts also include tax advantages as the taxable estate is not assessed until the second spouse has passed away, preventing estate tax from copmlicating their finances upon the initial spouse death.
Irrevocable Life Insurance Trusts (ILIT)
This trust is created to own and control an existing life insurnace policy while the policy holder is alive. Minimize estate tax, gift taxes, and more by having the ILIT manage and distribute insurance proceeds upon the policy holder’s death.
Lifetime Gifting Trusts
Significant financial gifts to family and spouses, including property are subject to specialty trusts that enable your grantor’s to receive your gift as an annuity rather than a lump sum and eliminates costly gift taxes. These trusts include Grantor Retained Annuity Trusts, Spousal Retained Annuity Trusts, and Qualified Personal Residence Trusts.
Reduce your family’s tax burdens by placing charitable contributions in your advanced planning. Transfer your assets smoothly with tax-exempt contributions on a monthly basis by either the trust itself (Charitable Lead Trust) or splitting estate annuitites between your grantor and a charitable donation (Charitable Remainder Trust).
What Are the Differences Between a Revocable and an Irrevocable Trust?
Simply put, a revocable trust can more easily be changed than an irrevocable one.
With a revocable trust, you maintain control of it until you die or are declared mentally unable to make important decisions. Legally, you are the grantor.
With an irrevocable trust, a court order is needed to make changes. Also, the court may not agree to make changes.
However, your loved ones won’t pay any estate taxes on their inheritances. Your creditors cannot access those funds, either. This includes the Internal Revenue Service (IRS) and state taxation bodies.