The everyday meaning of the word trust is a feeling of assurance and confidence. In its legal sense, a trust can provide this very feeling by holding your assets in safekeeping for the benefit of the people you choose. Trusts are extremely useful in estate planning.
Types of Trusts
Reduce or avoid estate taxes with a bypass trust. This type of trust is set up through the Wills of a married couple. When one spouse dies, assets from her estate are directed into the bypass trust. When the surviving spouse dies, estate taxes are minimized because the assets in the bypass trust are excluded from her estate.
Provide for a child or someone who needs help managing money with a minor’s trust. Money left to a young person in a lump sum is often squandered. By setting up a trust instead of leaving the money outright, you can ensure that it is spent only on important expenses, like the child’s health, education, and support.
Charitable Remainder Trust
Contribute to a charity with a charitable remainder trust. This type of trust gives you an annual income and then benefits a charity upon your death. By creating and funding the trust, you will enjoy an immediate charitable deduction, and when the trust is funded with appreciated assets like stock, capital gains taxes can be avoided.
Special Needs Trust
Help someone on public assistance from jeopardizing their benefits with a special needs trust. This type of trust will allow you to provide for someone on certain kinds of government assistance without jeopardizing their benefits.
Revocable Living Trust
Protect your privacy by keeping your estate plans out of public records with a revocable living trust. This is a trust you would establish in your lifetime, rather than through your Will. It serves as a Will substitute, allowing your assets to transfer efficiently upon your death without the need for probate.
Not every estate plan needs a trust, but for those that do, the assistance of a competent lawyer is essential for ensuring that the trust achieves its intended purpose.
In addition to drafting the trust documents, a lawyer can help your trustee invest and manage the trust assets and make distributions to the beneficiaries in accordance with your wishes.