“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.”
Your search for ‘trust lawyers near me’ or ‘living trust attorneys near me’ probably landed you on this page. One thing is for sure, this reflects you as having taken the first important step towards estate planning.
Trusts are generally deemed an effective estate planning tool, even much better than having a will in some cases. And it does not matter how much money and assets you own. Many prudent Americans like you will want to set up a trust at some point in their lives.
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 in evaluating every best possible option in your case for creating a trust.
What is 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 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 individuals or parties to a trust
In essence, three distinguished individuals or parties are essentially required to form a trust. These are –
- A Trustor
- A Trustee
- A Beneficiary
A trustor, also known as a grantor and settlor, is the person who creates a trust. He is the person who entrusts another person with his funds and assets, by way of a trust, for the benefit of another person.
A trustee is a 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 is created almost similarly. Despite this, there are valid differences between the two. Some of the key differences between a will and a trust that you should know about are –
- Unlike a will, a trust document isn’t useful for appointing guardians of a trustor’s minor children.
- A trust cannot usually be challenged in a court of law. Contrary to this, a will’s authenticity can be easily disputed in a court of law.
- A trust document must not pass through the lengthy probate process 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 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. Therefore, hiring a living trust attorney’s services can help you move in 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, it is important to know its advantages and disadvantages before setting up a trust.
Pros or benefits of trusts
The following is a brief account of some reasons validating the importance of establishing 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 of the actual time frame and a favorable outcome in a contested case going through probate.
As a result of the above, probate cases tend to be very expensive. 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 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 completely avoid or at least minimize the amount of estate taxes. Estate taxes are generally payable on the total assets left behind by a deceased person.
However, whether an estate tax is due depends on the state and federal laws and how much a deceased person owns as assets, 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 federal estate tax rate 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 a person’s assets from being pursued by creditors, both during his life and after his death. Likewise, it 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.
Through instructions in the trust document, a trustor can validate the time, nature, and event of distribution of all assets and funds held by the trust. This means that the distribution of any of the trust’s assets and 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 for appointing a trustee to handle the trustor’s affairs in case he becomes incapacitated. A trust made for this purpose will also help prevent conservatorship.
A conservatorship means that in the absence of trust in the above case, the court itself appoints a person to look after the incapacitated person’s affairs. While this serves the purpose, it creates otherwise avoidable trouble for the incapacitated person’s family. For instance, it required the court’s permission to withdraw financial assistance from the incapacitated person’s estate each time.
Cons or disadvantages of trusts
Although perceived as such, the following cannot always be taken as disadvantages of setting up a trust. This is because practically both of the following functions are usually performed in many other situations.
1. Trusts involve extensive paperwork
Setting up a trust may involve some additional and extensive paperwork. For example, ensuring that the trust owns the title of any asset transferred to the trust.
2. Keeping accurate records of trusts affairs is re quired
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, all 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 to benefit a beneficiary or beneficiaries.
A living trust can be both revocable and irrevocable. Upon the death of the grantor or trustor, the assets held in the trust pass down to the beneficiaries. This happens following 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 mentioned in the deceased person’s will.
Since the creation of a testamentary trust happens through a will, three things should be kept in mind. First, it cannot exist until after the trustor’s death. Second, a testamentary trust does not avoid probate. And third, a testamentary trust is irrevocable since it is formed after the trustor’s death.
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 may also 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 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 without any funds or assets put into it by the trustor.
Types of trusts funds
Trusts can be formed to fulfill various purposes and manage different 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. As discussed above, the extensive accounts related to trusts 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 the complexities of setting up a trust and achieving its purpose.
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.