One of the rewards of being an estate planning attorney is helping individuals and families put their goals and objectives for their financial futures in effect. Estate planning is the process one goes through to ensure that his or her assets pass to the intended beneficiaries in an appropriate manner, taking into account the family’s particular circumstances and needs.
One of the most important tools used in estate planning is the Trust. There are several types of Trusts, used for a variety of reasons. Trusts can be revocable or irrevocable. They can be stand-alone documents called living trusts or they can be testamentary trusts if they are included in a Will.
Trusts are often used to protect the assets transferred into the Trust against the creditors (including divorcing spouses) of the Trust beneficiaries, or from being diverted from your family and your intended beneficiaries to someone else’s family, which can often happen in the case of second marriages.
Trusts can provide privacy which cannot be obtained in a Will. Also, a Will disposes of all assets at your death, while a Trust can carry on for a longer time, such as the lifetime of a beneficiary or until a specific age is reached, such as years after the age of majority or when a child is of an age when he or she would be better able to manage his or her own financial affairs.
A Trust provides more flexibility through the use of powers of appointment, the ability to make a variety of investments, and the manner and timing of distributions to the beneficiaries. A Trust can also be used to reduce or eliminate estate tax or to keep trust assets from being taxed in your estate.
If you become incompetent, a Trust can be useful to allow for proper management of your assets and to use those assets for your benefit while you are incompetent. If you die, the trust assets can be available immediately upon your death without the need for probate, saving time and costs to your family.
There are many types of trusts used to accomplish a wide range of purposes. In my next few posts, I will give you highlights of various trusts and how they may benefit you and your family to accomplish your estate planning goals and objectives.