Are there different kinds of trusts and which is right for me?
There are many different reasons why you may want to establish a trust – probate avoidance; preserving assets for beneficiaries; creditor protection; legally minimizing estate tax obligations, etc., however, the most often cited reason for establishing a trust is peace of mind. There are several different types of estate planning tools, including many different types of trust structures that can help aid in providing you with the peace of mind you seek. Consulting with an experienced estate planning and trust attorney is critical to setting up the best trust, or trusts, to meet your specific goals and needs. The San Luis Obispo trust attorneys at Toews Law Group, Inc., provide estate planning and trust services to clients on California’s Central Coast and elsewhere in the state.
Whether your desire is to be sure the family home transfers safely to your spouse, your pet is cared for, or you have complex estate planning needs that may involve family foundations or business succession plans, the appropriately structured trust(s) is critical for protecting and distributing your assets after your death.
An attorney who is experienced with trusts and estate planning can help you reach decisions that will best meet your needs. These needs may include:
- How to retain control over the trust during your lifetime
- Who will administer the trust in the event you become incapacitated or upon your death
- Is an irrevocable trust, such as a charitable trust, an appropriate tool
- How to set up trusts for dependent children, disabled beneficiaries, or your pets
- Should your existing trusts be revised
There are a variety of types of trusts:
- Living trusts (often termed family trusts or revocable trusts), are created during a person’s lifetime to legally minimize taxes, leverage other financial advantages, manage property, avoid probate, and preserve financial privacy.
- Revocable trusts can be revoked or changed while the trustor (the owner of the trust) is still alive, and becomes irrevocable upon the death of the trustor. Once irrevocable, the terms of the trust may not usually be amended and the goal of the trust is to distribute its assets to the new “owners” – i.e. the beneficiaries.
- Irrevocable trusts typically cannot be altered or revoked once created. These trusts offer tax advantages that are not offered by revocable trusts. Insurance trusts, charitable trusts, and trusts for children are common examples of irrevocable trusts.
- Joint Married Trusts are usually established as revocable trust that split into two or more shares after the first spouse dies. These are sometimes referred to as Married AB, or Bypass Trusts. After the first spouse dies, the couple’s assets divided into two or more shares for the surviving spouse’s benefit. These trust structures are used to minimize taxes, may provide some asset protection to the surviving spouse and may provide some assurance in blended family situations involving children of prior marriages. After the surviving spouse dies, the assets are then distributed to the beneficiaries.
- Special needs trusts provide for mentally or physically disabled beneficiaries.
- Generation-skipping trusts qualify beneficiaries for the generation-skipping transfer tax exemption.
- Qualified Personal Residence Trusts (QPRT) allow a person to gift their house through a QPRT at a low gift tax value to a beneficiary for the use of the home during their lifetime and avoid estate tax.
- Pet trusts provide for the pet’s care after the owner is unable to do so or dies.
You do not need to have a large estate to have a trust. The right type of trust can protect assets of any value including the family home, a retirement account, or insurance policies. It is important to get solid advice based on experience before creating a trust, estate plan or will.
The San Luis Obispo trust attorneys at Toews Law Group, Inc. are prepared to assist you with all estate planning matters. The law firm’s services are closely coordinated with other professional advisors, including accountants, financial advisors, business evaluators, real estate professionals, and others to be sure that all of the required appraisals, tax filings, and legal recordings take place in the correct manner.
Toews Law Group, Inc. can make setting up the necessary trusts as trouble-free for you as possible. Contact them today for an appointment.
