Why should I create a trust?
One of the primary services an estate planning attorney provides is assisting clients in creating trusts. While some believe that trusts are only useful
Different types of trusts have distinct advantages, so it is important that your trusts and estates attorney understands the specific needs of you and your family. There are many variables involved, all of which your lawyer should be privy to, such as whether:
- There is a special needs member of your family
- There are minor children you want to designate as beneficiaries
- One of your beneficiaries is known to be irresponsible with money
- Privacy is a major concern to you
- You want to prevent a beneficiary from losing future government benefits
- You want minors to inherit only if they meet certain standards (e.g. graduate college)
Once your estate planning attorney understands all that you want your estate plan to accomplish, he or she will be able to recommend precisely which trusts will be beneficial to you and to draft them accordingly.
Purposes of Trusts to Consider
- Avoiding probate
Assets held in a trust are not included in your estate and, therefore, do not require probate or the payment of probate fees.
- Having trustees to manage your assets
Though you may be comfortable managing your assets during your lifetime, you may want to designate someone you consider financially reliable to take over after your death, especially if some of your beneficiaries are minors, irresponsible, or incapacitated.
- Protecting your assets
Most people want to protect their assets from creditors, scam artists, excessive taxes,
or thepossibility of a divorce in the family. Several types of trusts can provide this
Protection, among them irrevocable trusts and marital trusts.
- Controlling distribution of assets
If you have a beneficiary who is a minor or whom you consider unreliable because of an addiction, poor
judgement, age, or profligacy, your estate planning attorney can create a minor or spendthrift trust.
- Providing privacy
One of the reasons people choose to avoid probate, apart from the fact that it is expensive and time-consuming, is that wills and probate are public. By constructing trusts as an alternative, the whole process remains confidential.
- Preserving disability benefits
Because certain government benefits, such as Medicaid, are means-tested, i.e. based on how much money the recipient has, it is essential to think about the fact that such benefits might be lost if the individual in question receives a significant inheritance. By having the foresight to establish a trust for such a person, you can ensure that he or she will keep receiving government benefits, but will be provided with extra funds as needed by the trustee you appoint.
- Charitable giving
When you leave money to charity, you want all of it to help the cause you have chosen.
Once you fund a charitable trust, the assets placed in the trust are no longer part of your estate for estate tax purposes.
As you can see, having your estate planning attorney create trusts for you can make meaningful improvements in how effectively you distribute the assets you leave. You should make sure that the estate planning attorney you choose is well-credentialed and has a well-deserved reputation for cutting-edge knowledge of the law.