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.
A Revocable Living Trust (RLT) is a trust created that can be changed after its establishment. The Trustee and the beneficiary of the trust can also be the grantor during their lifetime, and assets can be managed just as the grantor owned them outside of the trust. The benefit of having assets in an RLT is that probate is avoided upon the grantor’s death. When the grantor dies, the trust has a subsequent trustee and other beneficiaries named that benefit.
Trusts don’t have to be overly complex and expensive. When used properly, a Trust is an effective tool in the management and distribution of assets. Proper planning ensures that a trust can achieve many benefits to you and your loved ones depending upon your circumstances and what your long-term goals are.
If you are interested in a Trust as a way to protect yourself and your assets, or simply in order to qualify for long term care assistance it is critical that you have an experienced attorney assist you.
Daren Gum is a knowledgeable attorney dedicated to ensuring you and your assets are properly protected in a Trust. He understands the long-term impact that a Trust has and can guide you in the process of creating a Trust tailored to your personal goals.
If you need a Trust created, or need to update an existing Trust, contact Daren today for a consultation at (828) 329-3825.