Trusts
A trust is a contract between you, as its creator, and a trusted person you name to oversee its assets, known as a “trustee.” The trustee has authority to manage assets and dispose of them for the benefit of one or more persons, the beneficiary or beneficiaries, as directed by you in the trust agreement. A trust may be revocable or irrevocable. It may be created during your life or at your death. Trusts may be used to avoid probate, minimize taxes, keep assets out of your estate or provide management of assets for the care of a loved one.
Revocable Trusts
A revocable trust allows you to revoke, or change, the terms you have set up for the trust as long as the law says you are still competent and can make such decisions. A revocable trust can be a useful tool for managing your assets during any period of incapacity. It also avoids probate for the assets held in the trust, because trust assets are “non-probate” property.
Irrevocable Trusts
An irrevocable trust, is not as easily modified, as the grantor does not have sole discretion over the assets that are placed in the irrevocable trust. This is because you relinquish any ownership rights to the property that you put into the trust. It is important to get legal and financial advice before creating this type of trust. Irrevocable trusts can help in managing estate tax obligations. The assets are owned by the trust (not you), so estate taxes are avoided. Holding assets in an irrevocable trust can also be useful if you’re trying to qualify for Medicaid to help pay for long-term care and want to avoid having to spend down assets. However, it is important to note that DHS will examine any gifts or transfers made within the previous five years, including transfers to an irrevocable trust, when assessing qualification for Medicaid.
Trusts can be a valuable estate planning tool but should only be drafted and set in place by an experienced estate planning attorney. PK Law’s Estate Planning Attorneys can assist with the following types of trusts:
Revocable Living Trusts
Irrevocable Life Insurance Trusts
Grantor Retained Annuity Trusts
Spousal Lifetime Access Trusts (SLATs)
Trusts for Minor Children
Generation Skipping Trusts
Special Needs Trusts (for people receiving benefits)
Charitable Trusts and Foundations
Insurance Trusts
Qualified Sub-Chapter S and Electing Small Business Trusts
GRATs, QPRTs, and other split interest trusts
Bloodline Trusts
Pet Trusts
Contact a PK Law Estate Planning Attorney to learn more about how Trusts may fit into your overall estate plan.