One of the most important things you can do to protect assets is to organize everything by carefully documenting who has power over them. That’s why we have trust and will. A trust is an estate planning tool that goes further than the scope of a will by guiding and managing wealth/property both during and after death.
Whenever you possess a trust, you enter a fiduciary relationship where one person or bank acts on behalf of and for the benefit of another. Furthermore, there are several ways of constructing these arrangements. What are the most common types of trusts and how do they aid you in estate planning?
Most Common Types of Trusts
This is not an exhaustive list, but here are the kinds of trusts you’ll encounter most often.
This kind of trust may resemble a will because it’s often called a “living trust,” and, as the name implies, is subject to revocation or change by the Grantor these agreements are very useful for avoiding any entanglements with probate, they transfer property to a trust, the trust maker, called the Grantor, is usually the initial trustee and beneficiary, and they can add/remove items from the trust at any point in their life.
If the client chooses, they can also establish an irrevocable trust, which as the name implies, cannot be revoked or changed (without court approval). Irrevocable trusts are often created for third-party beneficiaries and are a better way to protect assets from creditors.
This is where the trust goes toward the benefit of a person’s preferred charitable cause. It’s also a good tax shelter since it allows you to lower the burden of both the gift and estate taxes.
Asset Protection Trust
These kinds of trusts, often established abroad, protect a client from asset forfeiture at the hand of creditors. The trust maker can place certain property into a trust (typically irrevocable) for a set duration, then reclaim the assets later once the trust term expires.
Spendthrift trusts, as the name implies, have a purpose of protecting the beneficiary of the trust against spending too much, selling assets uncarefully, and incurring financial ruin. Usually, it’s made so that the beneficiary receives gifted assets more gradually. This is very helpful for retirees who struggle with budgeting. It can also protect trust assets from the beneficiary’s creditors.
There are also many other kinds such as Constructive Trusts, Special Needs Trusts, Tax-By-Pass Trusts, and Totten Trusts. These relationships are very specific and the subject of lots of legal interpretation.
That’s why Ken Nota’s office dedicates substantial effort to assist the citizens of Sarasota with comprehensive estate planning services. If you need the help of a qualified professional to construct and understand trusts, then he’s your man.
The Law Office of Kenneth J Nota offers a wide array of legal counseling and services that cover wills and trusts, business law, real estate law, and much more. His many years of experience in both corporate and private practice make him the most uniquely qualified in the Sarasota area. To learn more, call the office for assistance at 941-309-5270.