What is a Trust?
You’ve heard that you need one, so what exactly is a trust? Simply put, a trust is a book of rules with a name and owner attached to these rules. There are three parties to a trust: the person who creates the trust is the Grantor, the person or people in charge are the Trustees, and the person who will receive the assets of the trust once particular circumstances are fulfilled is the Beneficiary. Depending on the circumstances, all three of these roles may be the same person. Trusts may help to avoid probate, eliminate expensive fees, and are a way to protect your assets. A trust will lay out all the rules when it comes to the division of your estate, and generally takes much less time than a Will and the probate process.
Types of Trusts
There are numerous types of a trust you can establish for your beneficiaries. Each trust has particular benefits that may be right for you.
A living trust is designed so you can pass along your assets to your beneficiaries without having to go through the probate process. A living trust is also beneficial because it allows your assets to protect you if you become unable to manage your own affairs. A revocable trust and family trust are both another name for a living trust. This type of trust can be altered at any time. Only at the point of death of the trust writer, or grantor, will the trust become irrevocable.
An irrevocable trust, as mentioned above, is a trust that cannot be changed. It has the same effect as a revocable trust in that you will be able to transfer your assets from your estate to your beneficiaries without probate administration. However, there are different rules and guidelines that govern editing this type of trust once established. The benefit of having an irrevocable trust is that it can substantially reduce your estate taxes.
Special Needs Trust
The special needs trust provides financial support for someone in need who cannot handle their own affairs and expenses. The special needs trust can become confusing since using the assets for necessities such as housing, clothing, or food, may interfere with social service support. A trust lawyer will be able to further explain the trust into deeper detail.
If one of your last requests is to donate your assets to charity, a charitable trust would be suitable for you. It is extremely beneficial to establish a charitable trust as soon as possible, as it could be used as a tax deduction in the present for your gift in the future. Furthermore, if you name yourself as the income beneficiary, your charitable donation will be given tax free. To guarantee your children their inheritance as well, setting up a life insurance policy equal to the amount of your gift and naming your children as the beneficiaries will solve this issue.
Benefits of Setting Up a Trust For Loved Ones
Setting up a trust is not only beneficial for you but it is extremely beneficial for your loved ones. Here are the top 5 reasons why you should set up a trust for your loved ones:
HELP TO AVOID PROBATE
Creating a trust can save you from expensive legal fees and time-consuming paperwork
If you have a beneficiary who is not good at managing money, a trust gives you the option to pay your beneficiary in smaller amounts over a period of time. A trust can also determine how funds are spent.
A trust could be used for your child’s college tuition. An education trust will cover the expenses of a higher education and relieve the burden of expensive student loans in the future.
LOWER ESTATE TAXES
Creating a trust usually eliminates or significantly lowers estate taxes, a burden on your grieving loved ones.
ELIMINATE FAMILY FEUDS
If you set up a trust now, your entire estate and assets will be planned accordingly. This may help to eliminate arguments over who gets what property.
Why Choose Ward Arcuri Foley & Dwyer?
Ward Arcuri Foley & Dwyer is a local, trusted law firm. We pride ourselves on giving each client the one-on-one attention you deserve when it comes to all your estate planning and legal requests. Not everyone is the same, and neither are estate plans. With our combined nearly 50 years of experience in many aspects of the law, Ward Arcuri Foley & Dwyer has the extensive knowledge to help you protect your assets and create an estate plan using an estate plan that is tailored to you and your loved ones.Contact our office at (315) 797-7300 or fill out our contact form and we will be able to schedule a free consultation right away with our experienced trust lawyer Drew Ward, Esq.