“Finding expert living trust attorneys near me will help you a lot in your estate planning. Our trust lawyers can help you understand trusts and trust funds that best suit your needs, its purpose, and how to avoid taxes and probate.”
Probably your search for ‘trust lawyers near me’ or ‘living trust attorneys near me’ have landed you on this page. One thing for sure, this reflects you as having taken the first important step towards estate planning.
Trusts are generally deemed to be an effective estate planning tool, even much better than having a will in some cases. And it does not matter about how much money and assets you own. Many prudent Americans just like you will want to set up a trust at some point in their life.
So why not start now. This article covers most of the important details that you should essentially know about, to begin with, trusts. Then once you have finished reading it, one of our trust attorneys can help you proceed to the next step. Our living trust attorneys can assist you to evaluate every best possible option in your case for creating a trust.
What is a trust?
A trust is a legal arrangement, also known as a fiduciary relationship, established by a person (trustor) giving authority to a second person (trustee) to hold, manage, and use assets and/or funds for the benefit of a third person (beneficiary).
Trusts can be easily created to manage and distribute, part or all of a trustor’s money and assets, either during his lifetime or after his death. In addition to this, trust benefits also serve several other purposes. For example, protecting assets from creditors, avoiding taxes and probate, etc.
Essential individual or parties to a trust
In essence, there are three distinguished individuals or parties that are essentially required to form a trust. These are –
- A Trustor
- A Trustee
- A Beneficiary
A trustor, also known as grantor and settlor, is the person who creates a trust. He is the person who entrusts another person with his funds and/or assets, by way of a trust, for the benefit of another person.
A trustee is the person who has been entrusted with the right, duty, and responsibility of the trust. He holds, manages, and takes all necessary actions as authorized, required, and deemed fit for the benefit of another person.
A beneficiary is a person for whose benefit the trust has been created. A beneficiary or beneficiaries are the ultimate recipients of all the benefits under a trust.
Key differences between trusts and a will – A brief overview
Much like a will, a trust is also an estate planning tool and created almost in a similar manner. Despite this, there are valid differences between the two. Some of the key differences between a will and a trust that you should basically know about are –
- Unlike a will, a trust document isn’t useful for appointing guardians of a trustor’s minor children.
- A trust cannot be usually challenged in a court of law. Contrary to this, a will’s authenticity in many cases can be easily disputed in a court of law.
- A trust document does not have to pass through the lengthy process of probate to become enforceable. A will in most cases will suffer probate.
- There are no living trust costs once it is successfully established. This is because, upon a trustor’s death, the property directly passes on to the beneficiaries without going through probate.
- While a will is easy to revise, this isn’t the case for trusts. Some forms of trust are easy to revoke and revise while for others, there might be a need for a court’s approval.
- The document that creates a trust remains private whereas a will is a public document.
Deciding whether a trust, a will, or both will better serve your estate planning purpose, is an important consideration. Therefore, hiring the services of a living trust attorney can precisely help you in moving towards the right direction.
Pros and cons of having trusts
All decisions regarding your estate planning do not only concern you but also your spouse and future generations as well. Therefore, before setting up a trust, it is important to know about its advantages and disadvantages.
Pros or benefits of trusts
The following is a brief account of some reasons that validate the importance of setting up a trust.
1. Trusts can bypass probate court
Forming a trust helps bypass probate in the event of the trustor’s death. Without going through probate, all property, funds, and assets owned by the deceased person pass on to the heirs directly.
Probate is the legal process whereby a court decides the affairs related to the distribution of assets owned by a deceased person.
The major drawback of matters pending in probate court is that it could take months and even years to settle. For example, there is no guarantee as to the actual time frame and/or a favorable outcome in a contested case going through probate.
As a result of the above, probate cases generally tend to be very expensive as well. In some cases, parties involved in a probate process can expect to pay even tens of thousands of dollars before reaching any settlement.
Lastly, probate is a publicly dealt with process, with less regard to keeping your privacy and more chances of exposing your personal wealth. All matters and information disclosed during a probate trial could result in more harm and delay to the entire process.
2. Trusts may also avoid estate taxes
In most instances, creating a trust is an effective way to either completely avoid, or at least minimize the amount of estate taxes. Estate taxes are generally payable on the total amount of assets left behind by a deceased person.
However, whether an estate tax is due or not, depends on the state and federal laws, and how much a deceased person owned as assets, and funds, etc.
For the tax year 2021, the IRS exemption cap for filing federal estate tax returns and any resulting tax liability payment stands at $11.70 million. For the same tax year 2021, this exemption limit doubles for a married couple and stands at $23.4 million.
Any amount above these thresholds becomes taxable for estate tax purposes. The rate of federal estate tax varies between 18% to 40% of the taxable amount.
While most estates across the United States will fall under the maximum threshold limit and avoid estate tax altogether, paying a 40% federal estate tax could significantly reduce the amount of a deceased person’s estate leftover for distribution among the spouse and other heirs.
3. Protection against creditors by way of dictating terms of inheritance
A trust can also protect the assets of a person from being pursued by creditors, both during his life and after his death. Likewise, it also protects the trustor’s assets from being used by beneficiaries to pay off their debts or spend inappropriately.
4. Control over assets
A trustor remains in full control over all the assets and funds placed in a trust. This remains valid both during his life and after his death.
A trustor through instructions in the trust document can validate the time, nature, and event of distribution of all assets and funds held by the trust. This means that distribution of any of the trust’s assets and/or funds may not necessarily happen upon a trustor’s death.
For example, the trust document could specify the age or event till when the beneficiaries should continue receiving financial assistance from the trust. Similarly, should there be a transfer of assets as an inheritance to the beneficiaries in the future, or sold off can also be exclusively specified in a trust document.
5. Becoming incapacitated and preventing conservatorship
A trust document is also useful to appoint a trustee for handling the affairs of the trustor in the event of him becoming incapacitated. A trust made for this purpose will also help prevent conservatorship.
A conservatorship means that in the absence of a trust in the above case, the court itself appoints a person to look after the affairs of the incapacitated person. While this serves the purpose, it creates an otherwise avoidable trouble for the family of the incapacitated person. For instance, requiring the court’s permission each time to withdraw financial assistance from the incapacitated person’s estate.
Cons or disadvantages of trusts
Although perceived as such, the following cannot be always taken as disadvantages of setting up a trust. This is because practically both of the following functions are usually performed in many other situations as well.
1. Trusts involve extensive paperwork
Setting up a trust may involve some additional and extensive paperwork. For example, making sure that the title of any asset transferred to the trust, is now owned by the trust.
2. Keeping accurate records of trusts affairs is required
Once the trust is set up, maintaining an updated record of its affairs is mandatory. For example, deployment of assets when and for what purpose, profits earned and expenses paid, disbursement of funds to the beneficiaries, etc. should all be kept in the form of accurately written and well-maintained records.
Main categories of trusts
Even though there are a few other types of trusts as well, broadly speaking all trusts can be categorized into six main categories. These are –
- Living trust
- Testamentary trust
- Revocable trust
- Irrevocable trust
- Funded trust
- Unfunded trust
1. Living trusts
A living trust is a trust created during the life of the trustor. Its purpose is to hold and manage a trustor’s assets during his lifetime for the benefit of a beneficiary or beneficiaries.
A living trust can be both revocable or irrevocable. Upon the death of the grantor or trustor, the assets held in the trust pass down to the beneficiaries. This happens in accordance with the instructions mentioned in the living trust document.
2. Testamentary trusts
Testamentary trusts are also used in the form of a wealth management strategy. A testamentary trust is usually established to distribute the assets of a deceased grantor or trustor.
In the case of a testamentary trust, a trustee must follow the instructions as mentioned in the deceased person’s will.
Since the creation of a testamentary trust happens by way of a will, three things should be kept in mind. First, it cannot come into existence until after the death of the trustor. Second, a testamentary trust does not avoid probate. And third, a testamentary trust is irrevocable since it is formed after the death of the trustor.
3. Revocable trusts
As the name suggests, a revocable trust is a trust document whose content can go through an alteration or revocation. A trustor of a revocable trust has complete authority to do such action.
A revocable trust becomes irrevocable upon the death of the trustor. In such a situation, the assets held by the trust will transfer to the beneficiaries while avoiding probate.
4. Irrevocable trusts
An irrevocable trust is a trust whose content isn’t alterable, or which the trustor cannot revoke. It comes into existence by two methods –
- either the settlor himself creates an irrevocable trust, or
- a trust becomes irrevocable upon his death.
Although permission from the beneficiary or beneficiaries, or a court order as well, may revoke an irrevocable trust, in any other case such trusts cannot be easily amended, altered, or terminated.
A key advantage of an irrevocable trust is that it offers tax-shelter benefits.
5. Funded trusts
A funded trust is a trust where a trustor has transferred his assets or funds into it during his lifetime.
6. Unfunded trusts
An unfunded trust is only a trust agreement but without any funds or assets put into it by the trustor.
Types of trusts funds
Trusts can be simply formed to fulfill various purposes and manage different types of funds. The following list contains some of the popular types of trust funds –
- Insurance trust
- Qualified personal residence trust
- Credit shelter trust
- Generation-skipping trust
- Charitable trust
- A spendthrift trust
- Separate share trust
- Qualified terminable interest property trust
Living trust attorneys near me
There isn’t any doubt in saying that life is full of uncertainties. Estate planning or setting up a trust specifically for that purpose is one great way of dealing with it. However, forming a trust isn’t straightforward in each case. The extensive accounts related to trusts as discussed above, clearly highlight the importance of hiring a living trust attorney.
Attorneys Real Estate Group has a team of living trust attorneys to help you sort out your estate planning issues. Our living attorneys near me are estate planning experts. Over the years, the professional competence of our trust lawyers has enabled many people like you to successfully navigate through the complexities of setting up a trust and achieve its purpose.
Simply, give us a call at 916-702-8443 or visit our website at Attorneysre.com. You can also get free legal consultation by filling in the form at this link. One of our attorneys will get back to you as quickly as possible and will be glad to assist you. We look forward to welcoming you soon.