Trusts are an estate planning device you can use to manage your properties and holdings and avoid tax burdens. A trust can either be created during a person’s lifetime (a living trust), or after death (a testamentary trust) by a will. A trust creates a legal relationship between the trustee (the holder of the assets) and the beneficiary (the receiver of the assets). The grantor is the person who creates the trust.
Trusts and Wills Are Not the Same Thing
Trusts do not replace a will. Trusts and wills differ in various ways. Some of the differences include the following:
- Trusts pertain to specific parts of an estate, such as a piece of property, while a will is an all-encompassing document that dictates the distribution of all of your assets.
- Trusts are confidential, while the contents of a will become public information after the testator dies.
- A trust cannot appoint legal guardianship for your children
Types of Trusts
There are many different types of trusts serving a vast array of functions. For example, a charitable trust is created to benefit a particular charity or cause. An asset protection trust, on the other hand, works to help protect your assets from future creditors and lenders. Within the category of trusts, there are revocable trusts and irrevocable trusts. You control the assets in a revocable trust, while you relinquish control of the assets in an irrevocable trust and cannot makes changes to it without the beneficiary’s consent.
Special Needs Trusts
Individual clients with family members who have special needs present unique and complex legal challenges. Individuals who have family members with special needs must exercise extra diligence when it comes to estate planning. Once a special needs family member has qualified for government benefits, normally SSI and Medicaid, a gift of money or other assets, whether by inheritance or simple gift, can immediately render this person ineligible for those valuable benefits. Fortunately, the law does provide legal options.
Family members can create special needs or supplemental benefit trusts which allow friends and family members to gift assets to a family member with special needs without jeopardizing their benefit status. The law pertaining to these trusts is complex. Sean F. Byrnes has experience drafting Special Needs Trusts and included such trusts in the wills of clients with special needs children.
Because there are so many different types of trusts, and each type has advantages and disadvantages, it is very important to consult a qualified attorney who can ensure that you are choosing the trust that best suits your needs and is legally sound.
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