There are a variety of Trusts that people often talk about. More often than not, these people don’t really know exactly what it is that they are saying. Depending on who you ask, Trusts can be very intimidating; or the greatest thing since sliced bread. Here is a very brief introduction:
A Trust is a legal agreement among three (3) parties:
- The Grantor or Settlor is the person who creates the Trust agreement;
- The Trustee is the person or entity responsible for managing the property that the Grantor/Settlor decides to title in the name of the Trust; and
- The Beneficiary is the person or entity who is to receive the benefits of the property titled in the name of the Trust.
Trusts break down into two basic categories:
- Inter-vivos (Living) Trusts, which are made to take effect during a person’s lifetime.
- Testamentary Trusts, which are created to go into effect after a person has died.
Inter-Vivos (Living) Trusts
Generally superior to will for transferring assets to heirs at death, trusts avoid probate court proceedings needed to settle a will and often saved the family time and expense in closing the estate. Together with a power of attorney, the living trust also helps to avoid a court taking over control of your assets if you become disabled.
Credit shelter trusts: use by couples whose estates are over $1 million (including your life insurance) to save tens of thousands of dollars in estate taxes by creating an estate for each spouse, allowing a couple to pass up to $2 million state tax free instead of only $1 million.
What a Living Trust Can Do For You
It Eliminates Guardianship Proceedings
If you become disabled or are unable to manage your estate, your living trust avoids the need for a court mandated guardianship for the trust assets. The successor trustee you’ve named will step in and manage her affairs without government interference and expense.
It Avoids Probate
With a living trust, your assets will go directly to your beneficiaries after your death. There will be no probate attorney’s fees or court costs. There will be no court delay in distributing your assets, and all your estate planning wishes will be completely private.
It Can Reduce or Eliminate State Estate Taxes
With living trusts, a married couple can pass $2,000,000.00 absolutely state and federal estate tax free, to their errors. A single person can pass $1,000,000.00 State estate tax free.
It Can Protect Children From Earlier Marriages
Both the surviving spouse and the children from a previous marriage can receive fair treatment and protection under the terms of your living trust.
It Can Insure That Your Wishes Are Carried Out and Not Subject To Attack
It is generally accepted that living trusts are more difficult to contest then wills. This prevents disgruntled heirs from successfully attacking your estate plan.
It Allows You to Restrict How Your Estate if Managed and Spent Even After Your Death
It can provide for the care, support, and education of your children or grandchildren, by turning over assets to them at an age chosen by you. Even in insurance proceeds can be paid to the trust, so your successor trustee can manage them for the benefit of your family.
It Gives You Peace of Mind
When you’re living trust is completed, you and your family will relax knowing that your state will be managed and distributed by someone you have selected and trust.
As mentioned above, these Trusts are created to take effect after a person has died. Typically, they are irrevocable in form, in that the person who created them – the Grantor/Settlor, has died and cannot then, revoke or terminate the Trust agreement.
Inter-Vivo’s (Living) Trusts and Testamentary Trusts are just two examples of tools used within an Elder Law Estate Plan. The Great News is that you do NOT have to try to figure all of this out on your own!!! We are here to help you!!!
Give us a call, today at 914.607.7900