Youâ€™ve probably heard you need a trust to keep your family out of court and maybe out of conflict in the event of your death or incapacity. (And, if you havenâ€™t, you are hearing it now.) If you own any assets in your name at the time of your incapacity or death that are subject to probate, your family must go to court to access them. If you arenâ€™t sure if your assets are â€śprobatableâ€ť contact us to discuss.
A trust is an agreement between the grantor of the trust (thatâ€™s you) with a trustee (someone named by you) to hold title to assets for the benefit of your beneficiaries (whoever you name). When we break it down in its simplest form, itâ€™s that straightforward. Itâ€™s an agreement.
Now, the terms of that â€śagreement,â€ť called a â€śtrust agreement,â€ť can vary significantly, and thatâ€™s where we come in as weâ€™ll work with you to clarify the terms that you want between yourself and the trustee for the benefit of the people you name as beneficiaries.
Revocable Living Trust
With a revocable living trust (RLT), during your lifetime, you will be the â€śgrantor,â€ť the â€śtrustee,â€ť and the â€śbeneficiary.â€ť So, for all intents and purposes under the law, nothing really happens when you retitle your assets in the name of your RLT, so long as you are living and have the capacity.
With an RLT, once you become incapacitated (which is
determined as per the instructions in the trust document) or in the event of
your death, the trust becomes irrevocable, and the person or persons youâ€™ve
named as successor trustee steps in to control the assets held in the name of
the trust for the benefit of the beneficiaries named in the trust. If you are
still living but incapacitated, you would be the beneficiary still. If you have
died, then your named heirs would be the beneficiaries. At that point, the
trust may distribute outright to your beneficiaries or be held in continuing trust
-- protected from creditors, future divorces, future lawsuits, and even estate
taxes (if the trust is drafted properly) -- if your trust terms provide for
You could indicate in the trust agreement that you want your beneficiaries to â€ścontrol the trustâ€ť but that you want the trustee to continue to hold title to the assets, thereby protecting the assets, while giving the beneficiaries nearly full control and use of the assets. If you want to provide this kind of benefit and protection to the people you love, be sure to talk with us about building a Lifetime Asset Protection Trust into your plan. Itâ€™s highly worth it if youâ€™ll pass on anything more than what your children will immediately spend upon your death.
We support you in making these decisions in our Family Wealth Planning Sessionâ„˘ process before ever drafting a single legal document for you.
An irrevocable trust is the same as an RLT -- an agreement
between a grantor and a trustee to hold the property for a beneficiary. Still,
if the trust agreement is irrevocable, or once it becomes irrevocable, it
cannot be changed. There are some exceptions to this, but for the most part,
that is the case. If you put your assets into an irrevocable trust, you cannot
then take them out of the trust and return them to yourself because the gift to
the trustee to hold the assets for the beneficiary is irrevocable.
An irrevocable trust can remove assets from your name and protect them from future lawsuits or future growth in your estate, which removes them from your estate for estate tax purposes. We will recommend irrevocable trusts when we are preparing your estate for the potentiality that you may need long-term nursing care that you would like covered by Medicare without decimating your familyâ€™s inheritance. Or, on the other end of the spectrum, if you have an estate that could be subject to the estate tax or that could be at significant risk of lawsuits.
How We Can Help
When you meet with us, we will learn about you, your family dynamics, your assets and your risks and liabilities, needs and desires to support you in the empowering decision-making process of creating an estate plan that works for you and the people you love.
Never choose a type of trust without working with a lawyer who understands you, your family, your assets, and your goals. Never use a life insurance professional or financial advisor to choose the type of trust or draft your trust for you. Too many variables could leave your family with a big mess.
Weâ€™ll guide you to make the right decisions during life and be there for your family when you canâ€™t be. And weâ€™ll integrate the proper insurance, financial, and tax professionals into your planning at the right time to ensure everything we create works for you and the people you love.
This article is a service of Ganvir Law, Personal Family LawyerÂ®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Family Wealth Planning Sessionâ„˘, during which you will get more financially organized than youâ€™ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article.
The content is sourced from Personal Family LawyerÂ® for use by Personal Family Lawyer firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.