Why a Trust?

A trust is a written instrument prepared by a grantor that conveys the grantor's property to a third-party, a trustee, to hold for the benefit of the grantor's designated beneficiaries. There are two categories of trusts, irrevocable and revocable. The difference is in the name; one can be changed once implemented, one cannot. Within each trust category exist multiple types used for different estate planning or asset protection purposes.

 

Revocable trusts are highly recommended for people with real estate, children under the age of 21, individuals looking to provide asset protection to beneficiaries, and persons looking after an individual with special needs. Through a revocable trust, and individual can control how and when their assets pass to their children or family members. Another benefit of a revocable trust is that it avoids heirs having to go through probate, which is required if the property is not in trust. It is important to note that revocable trusts do not protect assets from creditors or lawsuits, nor from the estate tax and the IRS.

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Irrevocable trusts are beneficial for those with significant lawsuit liability (doctors, lawyers, general contractors, engineers, other professionals carrying liability insurance), those with estates over $5 million, and those with life insurance benefits in the millions. These trusts do protect assets from creditors, lawsuits, and the estate tax as long as they are properly set up and the conveyances are done prior to liability arising.

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Interested in learning more? Reach out to discuss!