Some people find that their estate planning goals cannot be accomplished through a simple will. In these cases, setting up and funding trusts can play an important role in helping people control and distribute their assets to those they love.
Trusts can be constructed for almost any situation, and the set-up will depend upon the grantor’s wishes and the beneficiaries’ needs. It is important that you have an estate attorney with extensive knowledge of the different types of trusts that could be used to protect your legacy.
At the Brady Cobin Law Group, PLLC, we have more than three decades of experience helping clients set up trusts and craft estate plans that are tailored to meet their needs. Our experienced attorneys will discuss your goals in detail to determine your options for protecting your assets and your family. Whether your plan is to minimize taxes or to help someone in special circumstances, our dedicated Raleigh trust attorneys will work to build the estate plan you need. Contact us today.
What Is a Trust?
A trust is a financial arrangement in which one party, the trustee, holds assets to be used for the benefit of another party, the beneficiary. The trustee and the beneficiary can be the same person or two different people.
Sometimes, clients need to set up trusts when a will isn’t sufficient or when they have specific goals for their assets and how they should be passed. Trusts can be arranged in many ways and tailored to specific circumstances. Some of the common types of trusts our attorneys assist clients with include:
- Revocable living trusts. When a person needs to manage and control assets during their life, these trusts can be a good choice. These trusts may be modified or ended throughout the grantor’s life. This allows grantors to tailor the trust to the needs and circumstances of the beneficiaries. Also known as an inter vivos or grantor trust, this can be an important tool for helping grantors keep assets out of probate while maintaining control.
- Irrevocable spendthrift trusts. Irrevocable trusts are those that the grantor cannot revoke or modify after they’re created. Irrevocable spendthrift trusts also don’t allow the beneficiary to transfer his or her interest in a trust. This means that irrevocable spendthrift trusts can be useful when a beneficiary is a poor manager of finances. If you want to establish a trust for someone, but you have concerns about his or her debts and spending habits, this may be a useful tool to benefit your loved one in the long-term. This type of trust also can have estate tax advantages and other benefits.
- Supplemental needs trusts or special needs trusts. These trusts are designed to help people with severe medical or disabling conditions. They enable you to set aside assets for the beneficiary without hindering the person’s ability to qualify for important benefits such as Medicaid.
- Testamentary trusts. This is a trust that is created by your will at the time of your death. Testamentary trusts are often used to provide for the care of minor children.
- Retirement trusts. A retirement trust is a method of saving for retirement while maintaining control over assets. It also may streamline asset transfers of retirement funds when the grantor passes away. These trusts are often used by those who need to draw on streams of income while they maintain their eligibility for government benefits such as Medicare.
- Charitable trusts. These are trusts that grantors establish for charitable purposes. The assets are typically held by the grantor and will transfer to a charity upon the grantor’s death. This allows the grantor to use trust assets while knowing that they’ll go to a good cause after the grantor passes away. These types of trusts also offer tax benefits since the trust assets may qualify as charitable donations.
- Credit shelter trusts. Also known as “bypass trusts,” these trusts help married couples minimize estate taxes. These trusts are usually used by high-asset couples to protect their estates in the event of one person’s death. This allows couples to enjoy their assets without having to worry they’ll be swallowed by estate taxes.
- Pet trusts. These trusts can be set up for the benefit of beloved pets. Pets can’t speak for themselves, and a dedicated trust will help owners ensure their pets get the care they need. Pet trusts designate specific animals, allow grantors to select a caretaker, and allow grantors to set aside money for the pet’s maintenance and care. These trusts provide clear guidance about pet care and can help put a grantor’s mind at ease.
What Are the Benefits of Trusts?
In some cases, trusts offer benefits over traditional forms of asset transfers and inheritance. Benefits include:
- Maintaining privacy and avoiding probate. A trust is generally more private than a will or other types of asset transfers. Wills are subject to probate proceedings that are a matter of public record, while trusts often are not. When structured correctly, a trust often allows you to avoid public disclosures of trust assets. If you have concerns about privacy and transferring assets to inheritors, a trust may help you protect your privacy and help your heirs avoid cumbersome probate proceedings.
- Controlling assets. Trusts can be structured in many ways. They allow grantors to carefully describe when assets are available and whom they go to. Some trusts allow the grantor to exercise control over the trust while the grantor is alive. For example, a living trust can be modified or even ended during the grantor’s life. This allows the grantor to adjust the trust to the needs and circumstances of the beneficiary. Other trusts, such as spendthrift trusts, control how assets are disbursed in the future.
- Tax benefits. Trusts can save you money because they are subject to different taxes than a traditional inheritance. A traditional inheritance is usually subject to an estate tax. Trusts, when set up properly, can help you avoid these taxes and help ensure that the beneficiaries get the greatest benefit from your assets.
Our Raleigh Trust Attorneys Can Help You Protect Your Legacy
Every person’s situation is unique, and our knowledgeable Raleigh trust attorneys can help find the right solution for you. Whether it’s setting up specific trusts or taking care of other important estate planning needs, our law firm has the knowledge and resources to help.
If you want to establish a trust or if you have questions about planning your estate, contact us today.