TRUSTS: PROTECTING YOUR ASSETS

Trusts are often associated with the wealthy. However, what most people don’t realize is that there are many different types of trusts, and when used properly they can be an effective tool in asset management.

A Trust is a legal entity established by a grantor to hold property for the benefit of named beneficiaries. Beneficiaries can be one person, a group of people or organizations. Additionally, a trust has a Trustee appointed to manage and oversee the property held in trust.

Since legal title of assets are transferred to the trust, trusts are generally used to avoid probate upon death. So, trusts can have the following benefits:

• Provide for any minor children or other loved ones who cannot manage their own financial affairs.
• Planning for qualification of Medicaid and other long-term health care assistance and benefits.
• Provide for the management of your own financial affairs in the event you become unable to do so and avoid an appointment of a guardianship.
• Restrict how and when assets are given to beneficiaries, such as for a particular purpose or when beneficiaries attain a certain age.
• Avoid a lengthy probate process and provide for an immediate transfer of your assets upon your death.
• Minimize estate taxes.

There are two basic types of trusts that exist: Testamentary trusts are trusts that take effect after your death and Intervivos trusts take effect while you are living. Generally, testamentary trusts are created in a Last Will and Testament and receive assets through the probate process. Trusts created while you are alive can be either revocable or irrevocable. Revocable trusts can be changed whereas irrevocable trusts generally cannot be altered. A revocable living trust is the most common type of trust created due to the flexibility and benefits it offers.